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South Africa BPO proposition
In collaboration with
What you will learn in this workshop
Sonia Galat,CEO & Co-founder Africa Business Venture
What is your experience in Africa?
• Specifics of South Africa • South Africa value proposition• How to leverage South Africa?
Specifics of South Africa
High infrastructures and quality of life
Excellent quality of infrastructure – roads, power, connectivity, retail and office buildings
Good quality of life with high standard of education, entertainment and healthcare facilities, very similar to those in the UK, US, Australia
Low cost of living: Johannesburg is ranked at 131 and Cape Town at 200 out of 214 cities on the worldwide cost of living index1 (Mercer 2015) (less than Prague, Dublin, Delhi, Kuala Lumpur and Cairo)
Compatible time zone with UK (GMT+2), US-6-8 hours, Australia -6-8 hours
Ease of access with more than 40 direct flights between UK, London Heathrow and South Africa, direct flights to Atlanta, New York, Washington in the US, Sydney and Perth Australia, Mumbai India
1 Lower the rank, lesser is the cost of living. (Rank 1 would be the most expensive city)
“Reliability and redundancies were issues of the past. The quality of service has now improved a great deal. My costs have reduced by 50%.”– BPO Executive in-charge of SA operations
Robust enabling environment
Number of undersea cables has doubled in the last three years with three more high capacity cables due to be active in the near future
Reduction in telecom costs by 90% since 2003. ~50% drop since 2008
100% SLA being provided on telecom contracts
Telecom providers providing end to end solutions from Europe, the Americas, Asia to any SA location
Source: Telecommunication service providers, Africa Undersea Cables research
Stable telecom infrastructure with steady addition in undersea cables and rapidly reducing costs
TELECOM CONNECTIVITY
Central & Eastern Europe
South Africa
PhilippinesIndia
Key destination for U.S. market
Multi-lingual delivery for Europe
Focus on Spanish, Portuguese language work
Global BPO hub
Central and Latin
America
South Africa (Durban, Cape Town, Johannesburg)
emerging as a hub to serve English speaking markets
While establishing
global delivery models, firms are looking to
expand beyond India and
Philippines
GLOBAL DELIVERY MODEL
South Africa value proposition
SOUTH AFRICA VALUE PROPOSITION
3. Significant cost savings
4. First World experience
5. Robust enabling environment
Deep domain skills
1. Skilled, English-speaking talent pool
Large scale English language talent pool with neutral accent
Distinctive strength in driving superior customer experience
Cultural affinity with UK,US, Australia
Costs 50–60% lower than source markets
Market-leading incentives that reduce costs by 20%
Narrowing cost differential with low-cost locations
First World infrastructure Superior quality of life for
expats. Time zone similarities and ease
of access or “follow the sun”
Mature domestic market World-class strengths in
financial services and legal domains
Large experienced pool
1
2 3
45 Attractive investment climate and
strong public sector support Robust and expanding
telecommunications infrastructure
Political and socio-economic stability
India
Philippines
South Africa
Malaysia
Egypt
Kenya
Sri Lanka
Northern Ireland
South Africa is among the Top 3
global locations that can support English language skills at
scale
Note: Represents qualified talent with good English language proficiencySource: Everest Group Research (2012)
Annual supply of fresh talent for English language BPO2011; ‘000s
370,000 BPO industry addressable workforce added annually across educational streams
~3.6 million English speakers
4,400
450
370
160
70
30
20
12
ENGLISH SPEAKING TALENT POOL
Western Cape100% = 65,000
Rest of South Africa
Distribution of Bachelor’s and Honors Graduates
Western Cape
Rest of South Africa
Science, Engineering and Technology
Distribution of Masters and Doctoral Graduates
Tertiary graduate profile mix in the Western Cape
100% = 9,500
43%
23%
7%
27%
Key education facts:
South Africa produced 403,874 successful matriculants in 2014 (closest UK equivalent to A-levels)
The first Master of Business
Administration (MBA) progamme outside of the USA was started by the University of Pretoria in 1949
The University of Cape Town Graduate School of Business consistently achieves a Global Top 100 ranking in the Financial Times rankings survey
GIBS Gordon Institute of Business, Johannesburg) was ranked as the top MBA in Africa by the Financial Times in 2014.
Business and Management
Humanities and Social Sciences
Education
25%
75%
Source: Department of Basic Education, Southafrica.info
18%
82%
HIGHLY EDUCATED POOL RESOURCE
KEY DRIVERS OF SA’S DOMAIN ADVANTAGE
Mature domestic market
Developed education system
Generates a large number of qualified personnel in specialist areas (e.g. actuarial, investment management)
Sector-specific training programs (e.g. banking, insurance)
• Large domestic industry: >US$250 billion banking assets• Skilled talent pool experienced in working with complex
products
• Strong IP in large scale back-offices (>230,000 employees)
• Ranked highly by World Economic Forum1 on multiple business and financial health indices:
• #1 rank (Best performing country) - Strength of Auditing and Reporting Standards
• #1 rank (Best performing country) – Regulation of securities exchange
• #3 rank – Financing through local equity market • #3 rank – Efficacy of corporate boards • #6 rank – Soundness of banks• #7 rank - Financial markets development
World Economic Forum’s The Financial Development Report (2014-2015) assessing 144 of the world’s leading financial systems and capital markets.
Source: World economic forum
Similarities with Western standards
Similar data protection laws (to European Union), products and certifications allow easy transition and stabilisation of operations
Professional qualifications (e.g. actuarial, legal) similar to the UK, reciprocity agreements
especially for Financial Services
How to leverage South Africa?
Main business process services outsourced to South Africa
LPO for large firms
Actuarial modeling, pricing
Offshore fund administration
Healthcare eligibility services
Niche, non-voice BPO
2 Location of choice to offshore complex, judgment oriented processes in key domains to deliver higher business value
Sales and delivery base for Rest of Africa
Shared services hubRegional shared
services hub
3 Platform to provide global shared services especially for the sub-Saharan African region
Customer contact services involving complex interactions such as upselling, retention
Multi-channel customer interactions - webchat, social media
Insights into voice of customer (analytics), value added services
Contact Centre for UK
1 Distinctive location to deliver contact centre activities across channels for the UK, US and Australian market
SA offers 55-70% arbitrage potential from source destinations
19-20
55-60%
UK (Liverpool)
Australia(Melbourne) South Africa
60-62
USA (Dallas)
49-51
56-58
Fully loaded operating cost per job for contact centre services1,2
2014; USD ‘000s per annum per job
Ongoing operating costs 40-45% lower than near-shore locations in the UK (e.g., Northern Ireland)
64-66% 67-69%
There is arbitrage potential of 45-50% (including sales and corporate overheads)
1 Represents ongoing operating costs excluding sales, account management and corporate overheads. Includes compensation, facility, technology, and administration costs associated with service delivery2 Exchange rate used: 1 USD = 13 ZAR, 1 GBP -=20 ZAR
Source: Everest Group (2014)
South Africa’s key competitive advantages
Largest domestic market in the continent – contributes ~25% of continent’s GDP
Stable political and attractive economic environment
Large, skilled talent pool
Excellent infrastructure and good quality of life – comparable to Western standards
Testimonials from end-user on their experiences of offshoring to South Africa
“With rapid globalisation, Africa is emerging as the final frontier and an opportunity too costly to miss. South Africa is the gateway to that.”
– Genpact SA
“You do not get any better in Africa than South Africa. This is the Jewel of Africa... In South Africa you have first world infrastructure and third world costs.”
– MD, Britannia Biscuits
“SA has made strong inroads in the African continent, providing BPO services for South African companies expanding into Africa. This will be a more profound growth driver in the future. “
– Frost &Sullivan
USERS EXPERIENCE OF OFFSHORING TO SOUTH AFRICA
Government and industry associations provide active support to potential and existing investors
Monyetla Work Readiness Programme: Employer-led, government funded initiative to augment entry level pool Government provides ZAR 20,444 per
unemployed person trained at NQF Level 2 and ZAR R21 236,70 at NQF Level 4 and above
Employers lead a consortium to recruit and train entry level staff
4500 learners have been trained in two phases, third phase targets 5760 learners
Sector Education & Training Programmes: Key sectors include: Banking, Services,
Insurance, F&A, IT Employers can claim up to 75% of levies
paid under National Skills Fund
Assist investors in setting up operations Provide relevant information and data Help investors with local regulations,
guidelines and operations set-up
Support existing players in expansion of operations
Manage the continued roll-out of the quality assurance programme
Talent development programs Assistance provided by BPeSA Industry Association
Business process services incentives
Framework and quantum Type of incentive
Number of offshore jobs created each year Incentive
2015/16 2016/17 2017/18 2018/19 2019/20
L1: Fully loaded operating cost per job less or equal to R300,000 per annum and 80% of jobs employ youth (18-35 years of age)
Upto 400 Base Incentive1 R24,000 R24,000 R24,000 R20,000 R20,000
401-800 20% one-off bonus
Bonus calculated for each job between 401 and 8002
Greater than 800 30% one-off bonus
Bonus calculated for each job in excess of 8002
L2: Fully loaded operating cost per job greater than R300,000 per annum and wages contributing at least 65% of cost base
Up to 200 Base Incentive1 R40,000 R40,000 R32,000 R32,000 R32,000
201-400 20% one-off bonus
Bonus calculated for each job between 201 and 4002
Greater than 400 30% one-off bonus
Bonus calculated for each job in excess of 4002
Key eligibility criteria
L2: R 176,000
Applicable for offshore jobs only At least 80% of the jobs to employ youth (18-35 years) Applicable for BPO delivery staff (i.e., agents, senior agents, team leads, managers/supervisors and quality
assurance) Minimum of 50 offshore jobs by the end of Year 3 Other criteria on sustainability of jobs to be met (detailed subsequently in the document)
1. Base incentive paid for 3 years on actual jobs created and sustained2. Bonus incentive paid once in the year in which the bonus level is first achieved
Mature domestic market
Provides a skilled talent pool experienced in working with complex products
Developed education system
Generates large number of professionally qualified personnel in specialist areas/ niches (e.g. actuarial, CFA)
Similarities with Western standards
Similar regulatory framework, data protection laws, products and certifications allow easy transition and stabilisation of operations
Testimonials from end-user on their experiences of offshoring to South Africa
“By offshoring work to South Africa, the firm has maintained extremely high standards, both in terms of client care and legal advice, while cutting fees sharply”
– Kerry Underwood, Underwoods Solicitors
“South Africa is recognised as having a sophisticated and world class financial services industry. We in Old Mutual are looking to leverage our South African skills and capability for the benefit of our wider global business”
– Old Mutual
Details on “How investors are leveraging South Africa”Complex, non-voice BPO
SUMMARY OF KEY MESSAGES
Emerging locations such as South Africa are becoming increasingly important in organisations’ global sourcing portfolios
South Africa is a key destination to serve the English speaking markets of UK, US, Australia
The industry continues to generate interest and accelerate momentum with several leading global players entering the market and bullish on growth
The revised incentive programme has generated significant interest and grants worth ~51 Business Process Services projects have been approved since 2011 with an estimated spend of R820m. The South African government estimates a further R6.bn will be spent on the incentive until 2019.
South Africa’s value proposition is anchored on
Large, skilled English speaking talent pool
Deep domain skills
Significant cost savings
First World experience
Robust enabling environment
In collaboration with
USEFUL LINKS:
https://goo.gl/forms/owisUtyCbXPDaZly2
www.africabv.com
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