What to expect from the Business Process Outsourcing Sector in 2020

Our top priority is to ensure skills are available for the current and future growth needs of the BPO sector. To this end, BPESA and its partners have released the Global Business Services Skills Strategy for 2019 – 2023. This strategy will respond to two needs: those of a growing export market segment, and the push to transition the workforce into Industry 4.0. It is a demand-led strategy that understands the need for future skills, domain skills, and BPO-specific skills across the value chain.

An Overview of the BPO Sector

The BPO market in South Africa consists of a sizeable domestic market that employs approximately 190,000 people, and a growing international market of 50,000 people. More than 85% of employees in the sector are youth under the age of 35.

Domestic Market Outlook

The domestic market experienced steady growth between 2004 and 2010. However, this growth has slowed to less than 1% CAGR (compound annual growth rate) since 2015. This decline is due to the rise of robotic process automation and new job types created by the digital economy. Recent research in the UK Contact Centre and BPO market predict 3% – 5% of jobs could be lost to automation by 2021. The same impact could be experienced here in South Africa.

This risk, however, presents the opportunity of upskilling the workforce to adapt and prepare for Industry 4.0. By equipping the workforce with relevant skills, this risk could be largely mitigated.

Export Market Outlook

The international market was formally recognised as a growth sector in South Africa in 2005. It has experienced significant growth in the BPO industry: it has grown between 21% – 23% annually, which is twice the global industry growth rate, and three times faster than India and the Philippines.

Summary of the BPO Skills Strategy

Australia and the United States are increasingly becoming key source locations for South Africa as more companies look for alternatives to the Philippines and India.

There is now a real need to ensure a supply of skills to meet the needs of the South African BPO Sector. Our Skills Strategy is therefore demand-orientated and aligned to the growth strategy developed at South Africa’s Job Summit in 2018 and incorporated into the President’s Jobs Summit Framework Agreement. The BPO growth strategy is geared to achieve positive impact over a five-year period on job growth, the economy, equity, poverty and employability:

Impact on Job Growth

• 50,000+ direct new sustained jobs.
• 50,000+ work opportunities.
• 150,000 indirect jobs created.
• 250,000 = total number of people affected.

Impact on Economy

• Each new international job generates approximately $18,4773 FDI per year.
• FDI potential of between $3,56 billion and $4,48 billion of compounded FDI for the period.
• This number would increase substantially when the ICT Jobs growth opportunities are realised – an additional 10,000 new jobs planned over the same period.

Impact on Equity

• 94% of jobs held by black people and 6% by white people.
• 62% of employees are typically female and 38% male.
• Between 25% and 30% entry-level workers are previously unemployed youth.

Impact on Poverty

• Basic monthly salaries for entry level customer service agents start at R3,500, with a median between R5,500 and R8,500 in year one.
• Many jobs can be performed in communities (with high speed fibre access to the internet) creating the potential to positively impact township economies.

Impact on Employability

• BPS Skills are highly transferable to other sectors such as Tourism, Hospitality, ICT, Retail and Finance, making people who have entered the BPS Sector highly employable in other jobs or sectors.
• This also grows the skills pool available for the SMEs and public sector institutions which require them.

The BPO Skills Strategy will enable domestic and export sectors to make sustainable changes to the skills environment that will support growth at scale and transform the workforce for the future. You can access the full Global Business Services Skills Strategy for 2019 – 2023 here.