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Business Process Outsourcing and Offshoring (BPO) PowerPoint Presentation
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Business Process Outsourcing and Offshoring (BPO)

Business Process Outsourcing and Offshoring (BPO)

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Business Process Outsourcing and Offshoring (BPO)

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  1. Business Process Outsourcing and Offshoring (BPO)

  2. Contents • Defining BPO • Background: South Africa’s window of opportunity • Gaps South Africa need to address • South Africa’s strengths, weaknesses, opportunities and threats • The actions taken • Sector support programme • Government assistance programme • Talent development • Marketing inititiative • BPO standards • 2nd Economy interventions • Telecommunication costs

  3. Customer care HR/Administration Payment services Finance and accounting High end offshoring Business knowledge services Administration/General back-office Defining BPO • Customer support • Collections • Helpdesk • Telesales and telemarketing (Inbound/outbound) • Web sales and marketing other SMA • Engineering • Design • Animation • Network consultancy • Recruiting and staffing • Hiring administration • Records management • Benefits administration • Payroll services • Financial analysis (?) • Database marketing and customer analysis • Biotech research • Other non proprietary research • Credit/debit card services • Check processing • EDI • Other transaction processing • Data entry • Document management • Claims processing • Tax management • Asset management • Other (correspondence and report production) • Billing services • Accounting transactions • Financial reporting and other • Tax consulting and compliance • Risk management • Treasury/financial management

  4. Background: South Africa’s Window of Opportunity • BPO&O global market is expected to grow from $10b to $50-60b by 2008 • 40-50% of the growth in banking and insurance • Result in an additional 3m jobs worldwide, • 200-500k will be contested by SA and other ‘tier 2’ players • SA is well positioned to exploit this opportunity • create 65-100k jobs, • attract $90-175m in real FDI, • GDP contribution of 0.3-0.5%. • substantial positive effect on BEE, SMME and Geographic Equity with respect to job creation

  5. Gaps SA needs to address • Talent availability: availability of managerial and agent level talent • Cost of operation: SA is about $7-8/hour/full time equivalent agent costlier than lowest cost centers, (e.g., India, Philippines) • Risk of operation: Perceived issues exist around personnel security and crime rates in SA • Set-up assistance: setup assistance and time required to complete set up requirements • Regulations: Concerns have been raised by companies on the flexibility of the labour regulations. • Third party vendor landscape: Only 4-5 scale players with experience of migrating international business are available in SA today • Marketing activities: Target marketing efforts conducted by provinces are not competitive in scale and sophistication

  6. Strengths Weakness Opportunity and Threat Analysis (SWOT) • Strengths • Cultural and language familiarity • Quality of business infrastructure • Economic and political stability • Quality of life and attractiveness of location • International connectivity • Adaptability • Entrepreneurial culture

  7. SWOT Analysis • Weaknesses • Cost of operations (labour and telecom) • Inadequate government support and investment (e.g. tax, incentives) • Talent gaps (agent and middle management) • Quality and cost of transport • Perceived security risk • Investor relationship management (marketing effectiveness) • Lack of scale vendors • Difficulty of set-up

  8. SWOT Analysis • Opportunities • Demand surplus in the traditional BPO&O market as India and China face supply bottlenecks • Opportunity to offer specialised services in sophisticated industries (e.g. Financial Services) • A foundation of multi-language skills • A location proposition to regional (Africa-based) players • An alternative location for captive/vendors already present in 1st tier locations e.g., India • Exploitation of country synergies e.g. culture, legal, regulatory • Exploit existing relationships

  9. SWOT Analysis • Threats • Pace of delivery against telecom deregulation agenda • Risk of union resistance (cf. atypical employment) and constraining labour regulations (cf. overtime) • Inability to build a strong, coherent industry body • Inability to open up lower cost quality talent pools and build sufficient managerial capacity • Negative perceptions/uncertainty regarding gating criteria and issues such as HIV, BEE and crime • Exchange rate volatility

  10. The actions taken • to exploit the opportunity have been largely coordinated through a partnership between the dti and the Business Trust. • under the direction and leadership of His Excellency, the Hon. Minister Mandisi Mpahlwa, MP. (The Minister of Trade and Industry and Director of the Business Trust). • The partnership also include key private and public sector decision-makers, namely: • Ms Thoko Didiza (Minister of Public Works and Director of the Business Trust), • Ms Elizabeth Thabethe (Deputy Minister of Trade and Industry), • Mr Derek Cooper (Chairman of Standard Bank and Director of the Business Trust) and • Mr Eddie Funde (Chairman of the SABC and Chairman of the industry body, Business Process enabling South Africa-BPeSA). • Operations are directed by • Dr. Raymond Ngcobo (Chief Director for Strategic Competitiveness Unit, Enterprise and Industry Development Division of the dti), • Mr. Brian Whittaker (CEO of the Business Trust) and • Mr Mfanu Mfayela (CEO of BPeSA).

  11. Sector Support Programme • Five work streams were identified: • Government assistance and Support • Talent development • Marketing • Industry mobilisation • BPO&O standards • Additional work streams have been identified • Telecommunications pricing packages for the BPPO&O sector • BPO 2nd economy strategy

  12. GAS Programme • The GAS programme was designed to support the development of the BPO&O sector, through: • Providing incentives to enhance the competitive advantage • Close the cost gap for BPO&O operations when compared to other BPO destinations such as India and Philippines • Address market failures that result in the high cost structure • Approved in December 2006 by Cabinet • Full roll-out in March 2007 • The objective of the investment incentive is to attract BPO&O investment that creates employment opportunities. • The grant is provided depending on the value of qualifying investment cost and employment creation. • The grant ranges between R37,000 and R60,000 per seat and is offered to local and foreign investors establishing projects that aim primarily to serve offshore clients.

  13. Benefits • INVESTMENT GRANT

  14. Talent Development • The most critical element of a distinctive value proposition – the ultimate basis for competition “TALENT AVAILABILITY” • SA starts with a good foundation of trainable people, however considerable training is needed to deepen the talent pool • There is a need for substantial government investment through • Company specific training and • work readiness training • Work Readiness Programme known as Monyetla is an initiative between the dti and the Department of Labour • aims to take unemployed matriculants or graduates through a process of learning work-readiness skills. • in its pilot phase aiming to train 1000 learners at a cost of R15 000 each • The Training and Skills Support Grant is directed towards the cost of providing company specific training (as opposed to industry wide training) up to a maximum of R12, 000 per agent. • The incentive grant is over and above the assistance obtained through the Sector Education and Training Authorities (SETAs) and is complementary to the BPO&O Investment Grant.

  15. Previous and proposed initiatives

  16. Previous and proposed initiatives

  17. Marketing • To persuade the best companies to do business in S.A. and remain in S.A by: • Understanding and properly communicating the SA Value proposition. • Encouraging regional and industrial diversity • Ensuring a competitive environment ( one stop shop) • Removing Regulatory obstacles • The initiative straddles both targeted and broad-based marketing.   • Targeted marketing focuses on attracting and securing selected high impact foreign investors, who will in turn create a groundswell of other investor interest. • Broad-based marketing encompasses the supporting of government and industry initiatives, to raise South Africa’s BPO&O global profile, with the aim of securing a dominant Tier 2 position.

  18. BPO&O Standards • A set of 3 new standards geared towards service quality • Address Inbound and Outbound Contact Centres and Back-Office Processing Operations standards in four categories: •Leadership and Customer Service Management •Human Resource Management •Operations Management •Technical Resource Management • SA Bureau of Standards (SABS) is now turning these into national standards • ISO is interested in the standards for the first global standard for BPO&O

  19. BPO in the 2nd Economy • Need to shift from concentration in main Metropolitan areas (JHB, DBN and CT) to ensure equitable distribution of benefit • New designated areas have been identified to direct some investment to depressed communities • Criteria for selection • Levels of unemployment and poverty • Availability of buildings • BPO potential in terms of local economic development • Availability of ICT Infrastructure • Talent availability and development

  20. Identified sites

  21. Telecommunication costs • Working with DoC on infrastructure for designated areas/ICT hubs • Negotiating with Telkom for a developmental pricing framework • Large offshore clients (>1000 seats) • Domestic clients • SMME’s • Designated areas • Work is ongoing

  22. QUESTIONS ???