Gauteng’s business process outsourcing (BPO) sector, which includes call-centre operations, is expected to exceed R7,4bn in sales in 2010 and grow 9-14%/year between now and 2014, according to new research by consultancy Frost & Sullivan.

The research was commissioned by Business Process enabling SA (BPeSA) Gauteng.

Gauteng has long dominated the SA market, currently employing 71% of the country’s full-time BPO employees — an estimated 35 700. Though BPO is commonly known for call-centre outsourcing, this comprises just 67% of the total industry. Other more complex outsourcing services such as IT support, financial accounting, data analytics and a variety of legal services account for a third of the industry.

“Many of our members struggled during the economic crisis, but our data shows that employment in Gauteng’s BPO sector grew modestly during the recession,” says BPeSA CEO Keryn House. “Now the strong players are well positioned to be globally competitive. In high-end services, our research tells us that we have a growing skills base and have a credible offering on a global basis.”

However, Gauteng’s BPO sector faces a number of challenges in competing internationally.

Industrial Development Corp senior economist Gerhard Kühn says inflation is the key to controlling labour costs. “Even if SA’s inflation rate stays at around the 6% level, it is still far higher than the 2,1% and 0,9% inflation rates in the US and Europe,” Kuhn says. “Both the US and the European Union strive towards a 2% targeted inflation rate. That means that, year-on-year, SA would become 4% less cost competitive vis-à-vis the developed world. This may not seem like a lot, but 4% is a big deal for corporations.”

But House says she is optimistic, especially because of support from government. “The Gauteng provincial government, and the cities of Johannesburg, Tshwane and Ekurhuleni are all behind us,” she says.

“Our research has identified nine large-scale projects that will be rolled out over the next four years to address skills development, infrastructure and industry support. The Gauteng government has embarked on an implementation project with Frost & Sullivan, in partnership with BPeSA Gauteng, to implement the Gauteng BPO strategy. — Staff reporter, TechCentral