Agriculture, Economic Development and Tourism

1. What are the details of the business process outsourcing (BPO) sector’s

economic contribution to the Western Cape economy for the last five financial years;

In 2019, the industry body reported that 35,484 call centre agents that service offshore markets. Foreign revenue of each offshore job is R350,000, which resulted in aggregated annual foreign revenue R12.419 billion in 2019. The sector’s contribution to GDP was approximately R37.5 billion.

In 2024, the industry’s body, Cape BPO, reported that 67,000 agents domiciled in the Western Cape service offshore markets, which resulted in R23.45 billion in foreign revenue. The offshore industry’s contribution to GDP is estimated at R75 billion per annum.

In terms of the impact on our people, the sector mainly employs matriculants and added 10,500 new jobs servicing offshore markets over the past 12 months making it one of the fastest growing sector in the Western Cape. The industry employs mainly from areas characterised by high unemployment, such as but not limited to Mitchells Plain, Khayelitsha and Delft.

2. What (a) are his Department’s plans for tracking the sector’s economic impact and

The Department tracks employment numbers through the industry body. Employers report their employment numbers to the industry body on a quarterly basis.

(2)      (b) role has the sector played in job creation and preservation;

Offshore BPOs promote the sector globally, actively seeking investment and job creation opportunities through winning offshore contracts servicing some of the largest and most popular global brands from the Western Cape. The industry continues to train new market entrants in mass. The training cost of new agents is inhibiting expensive limiting the growth of employment and the pool of labour suitable for the sector. The Department’s skills programmes aids companies as much as possible, but due to fiscal constraints risks the pace of further growth.

3. (a) what challenges has this sector faced in the province and

Prior to the Department re-entering the sector in support of skills development and experiential learning, salaries were growing by as much as 20% per annum as companies poached staff from each other instead of employing new market entrants and therefore creating net new jobs. Poaching drove up salaries without necessarily growing the workforce. While increased salaries may appear good for existing employees in the sector it was less positive in terms of transitioning unemployed youth into the workforce. The significantly higher than inflation wage increases negatively impacted the competitiveness of the industry and its ability to growth net jobs servicing the offshore market.

The Department’s experiential learning programme, coupled with its skilled development initiative incentivises companies to employ unemployed youth, which has to grow the pool of suitable labour and employment in the sector. The Department’s experiential learning programmes provide stipends to companies that employ unemployed youth without the required industry experience and a transfer of skills through accredited skills programmes.

On average the Department transitions more than 4,000 unemployed youth into fulltime employment opportunities. All experiential learning programmes are accompanied with accredited skills programmes suited to the respective occupations.

(3)      (b) why is the Western Cape a destination of choice for BPO companies?

Several reasons explains why the region is a destination of choice resulting in the growth and competitiveness of the BPO sector, which include but not limited to:

1. 1. Accent neutrality. Youth in the Western Cape has one of the most neutral accents making it easy for them to be understood, which reduces customer frustration and improves customer experience.
   2. Time-zone affinity. While more US campaigns have been awarded to companies based in the Western Cape, the majority of offshore jobs still services the EU market with which we share similar time zones.
   3. Unemployed English-Speaking Labour. The pool of unemployed labour that can service BPOs are plentiful, which reduces operational risk to companies based in the Western Cape.
   4. Price arbitrage. The Western Cape call centre agents are indeed pricier that locations such as Manila and Indian cities, however because the quality and accent neutrality inherent in our youth, the region is regarded as a near-shore equivalent. A near-shore equivalent destination is one that is characterised as having similar call centre agent quality had the service been delivered in the country that requires the service. Because we are significantly more cost effective than other near shore equivalent markets, the region offers significant value.