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SA BPO Industry Analysis and International Participation Analysis
South Africa BPO Market Overview
Contact centres have been the key growth frontier for BPO in South Africa. Prior to 2005, South
Africa was home to a small number of BPO service providers. Business processes were
predominately run in house with minimal outsourcing of services in place. However, since 2005, the
BPO market in South Africa has experienced accelerated growth due to the Increased support for the
BPO sector by the government in the form of several initiatives and incentives and Increased entry of
local and international companies offering and using BPO services.
South Africa’s main BPO offering has been mainly in the contact centre space. However, the vast
majority of contact centres in South Africa are operated as domestic captives (in-house) contact
centres. There are an estimated 180 000 persons employed in the South African contact centre
industry. Frost & Sullivan estimates that out of these 24 156 are employed as Full Time Equivalents
in the BPO sector.
Back office services will drive offshore BPO while front office will encourage domestic BPO .
Between 2005 and 2011, the South African government intends to create an additional 100 000 jobs
and US$90 million – US$175 million in the BPO industry
Frost & Sullivan believes that the contact centre industry has been a key driver of BPO growth due to
the following:
 There exists a large skills base that can be absorbed into growing the outsourced contact centre
(BPO) skills base
 The contact centre market in South Africa is well established and highly sophisticated in terms
of technology adoption and services offered
 South Africa has a vibrant off shoring industry, which draws on the country’s linguistic, cultural
and product affinity with the US, UK and Europe to deliver quality across contact centre service
lines
Frost & Sullivan thus believes that South Africa’s contact centre capabilities match those of Tier I
destinations such as India and Philippines
The current global trend is a slowdown in contact centre outsourcing and an increased focus on
other BPO services such as ITO, FAO and KPO. As a result, there is a need for South Africa to
aggressively expand its offering beyond contact centres in order to grow its off-shoring sector in
terms of both FTEs and revenues.
However, Frost & Sullivan believes that the domestic market will be a key driver of the outsourced
contact centre industry in South Africa. There are indications that businesses in South Africa are
becoming increasingly aware of the cost benefits of outsourcing and acknowledging the capabilities
of South African outsourcers with regards to contact centre services. Furthermore, incentives and
initiatives targeted at domestic companies and effective communication of Return on Investment
(RoI) in outsourcing will encourage local companies to outsource their processes. Therefore a
combination of back and front office services will drive growth of the South African BPO market
The South African BPO market is valued at US$885.2 million
Introduction
Frost & Sullivan estimates that the South African BPO market revenues were US$885.2 million and
an estimated 33 000 BPO FTE in 2007. Since 2005, South Africa has been on an aggressive drive to
establish itself as a key player in the global BPO market.
This followed the launch of various government initiatives intended to establish South Africa as a
viable competitor in the global market. A key driver was the ability of the sector to create
employment and economic wealth . In line with this development, the market has experienced
several positive changes:
 Consolidation of the market to create a unified body
 Year on year growth in offshore investment revenues as a result of aggressive marketing by
industry associations
South Africa has gradually established itself as viable player in the global BPO market.
Current market status - Domestic outsourcing - Leading global providers
Outsourcing activity within the local market is increasing. This is attributed to the increased
awareness of cost savings and improved efficiencies associated with outsourcing.
The advent of managed services has also fuelled growth of outsourcing by domestic companies
Managed services allow companies to own infrastructure or services and outsource the
management of this infrastructure to third parties. This allows the companies to have greater
control over their resources, the opposite of which had been a key inhibitor for the uptake of BPO
services
South Africa unlike other locations such as India and Philippines has a well established domestic
outsourcing market. As a result the country is considered to be a new player in the global offshore
outsourcing market
The industry is typically serviced from four main locations i.e. Gauteng, Western Cape, Eastern cape
and KwaZulu Natal (KZN). However efforts are currently underway to develop alternative
destinations for BPO.
South African service providers offer mainly low end BPO services with the majority of high end
services maintained in-house. Low end BPO services are those that do not require specialised skills
and have relatively minimum training requirements for example inbound product queries
South Africa boasts local presence by leading global BPO service providers such as Accenture, IBM,
Hewlett Packard and EDS. This is indicative of South Africa’s position as an noteworthy BPO
destination in the global market
Geographic profile of the SA BPO industry
Gauteng
Employed: ~22 110
Key Vertical Sectors:
Financial services;
telecoms
Western Cape
Employed: ~ 6 334
Key verticals: telecoms,
retail, financial
Offshore (FTEs): ~25%
Offshore (FTEs) : 48%
KwaZulu Natal
Employed: 3 600
Key vertical sectors:
Financial services,
insurance, government,
IT and Telecoms
Offshore (FTEs): <10%
Eastern Cape
Employed: 330
Operations: 10+ (2005
est.)
Offshore (FTEs): <5%
South African BPO market by region
Gauteng has historically dominated the South
African BPO market. Frost & Sullivan estimates the
number of FTEs in Gauteng were 23 430 in 2007
which represents 71% of total BPO FTEs
However, Western Cape, Eastern Cape and KwaZulu
Natal have established themselves as viable
alternative destinations for BPO services. In 2007,
Western Cape had an estimated 6600 BPO FTEs, an
increase from approximately 2 450 FTEs in 2005.
This represents 20% of total BPO FTEs in South
Africa
Eastern Cape had an estimated 330 BPO FTEs in
2007 from approximately 175 FTEs in 2005. This
represents an estimated 1% of total BPO FTEs in
South Africa
In 2007, KwaZulu Natal had an estimated 1 980 BPO FTEs, an increase from 875 FTEs in 2005. This
represents an estimated 6% of total BPO FTEs in South Africa
South African BPO market
South Africa’s offshore segment has steadily
improved over the 2005-2007 period. Frost &
Sullivan estimates 27 720 Full-Time Equivalent (FTEs)
in the South African BPO sector serviced onshore
companies in 2007.
South Africa has a well
established onshore BPO market with most of the
outsourcable services being provided.
South Africa’s well established domestic outsourcing
market positions the country in a positive light in the
global sector. This is because the level of maturity of
the domestic outsourcing sector has emerged as one
of the key selection criteria for outsourcing
destinations.
5 280 FTEs were dedicated to offshore companies in
2007
The contribution of offshore BPO revenues has steadily increased from 10% in 2005 to 16% in 2007.
Growth in offshore contribution is attributed to the entry of several multinational captives and BPO
service providers such as IBM, Teleperformance, Accenture, TCS and Budget Group during that
period
Future offshore outsourcing trends - Africa the next growth frontier for ‘offshore’ services
Near shore outsourcing from companies in the rest of Africa will drive the overall size of the South
African BPO market. South Africa is well positioned to capture a significant proportion in this region
because of the following:
 South Africa boasts world class telecommunications, superior IT skills, a well developed
financial services sector and a well established contact centre industry - This enables the
country to provide both basic and KPO services to the rest of the region.
 Africa has become the next frontier for growth for most international companies. South Africa,
being a highly developed market has and will continue to be the point of entry for most global
companies into the Africa region