New DTI BPO Incentive Scheme to Drop SA Operational Costs by 20%

CAPE TOWN, SOUTH AFRICA, December 15, 2010

As part of a continued effort to strengthen South Africa's presence within the multi-billion dollar BPO & O (Business Process Outsourcing & Offshoring) Industry, the dti (Department of Trade and Industry) has announced a new set of incentives aimed at attracting foreign investment.

The new programme will reduce the cost of BPO operations in South Africa by up to 20%, paying investors R112, 000 for each full-time job created and maintained. The incentives will be paid out over a three year period, in instalments of R40, 000 (2011), R40, 000 (2012) and R32, 000 in (2013). The incentive program runs in total for 5 years and any 3 of those 5 years may be used for incentives.

According to the Everest Consultancy South Africa currently offers BPO source destinations a 50 - 60% saving.

"The new incentives significantly reduce the cost of offshoring operations for investors, whilst providing flexibility in usage and simplifying administration," says Gareth Pritchard CEO of BPeSA Western Cape. "In addition, a graduated bonus incentive of between 20 and 30% is available for investors that exceed job creation targets as stipulated by the dti."

In 2007, the Government Assistance and Support (GAS) incentive programme was launched. During the period July 2007 - March 2010, incentives totalling R688 million were approved.

"The previous incentive programme was successful, but as the industry has grown it has also become more competitive, with a number of new second tier providers entering the market," says Pritchard. "To combat this, a new scheme was developed between the dti, BPeSA and the private sector aimed at rewarding long term sustainable investment."

What is currently offered?
• A base incentive as a tax exempt grant paid over three years for each full-time offshore job created and maintained.

What's different?
• The new incentive scheme of R112, 000 per seat is almost double what GAS was able to offer, making South Africa far more competitive from a global cost perspective.
• The revised incentives will be paid for a period of three years for every new offshore full-time job created and maintained.

Additional Financial Bonuses
• A graduated bonus incentive will be paid out on top of the current scheme for qualified companies.
• 20% bonus will be paid to operations providing 400 to 800 offshore jobs. This amount will be paid as a once off fee.
• 30% bonus will be paid to operations providing 800 jobs or more. This amount will be paid as a once off fee.

Who is eligible?
• Local and foreign investors registered as legal entities in South Africa who create at least 10 offshore jobs each year.

"South Africa has always been known as a high quality BPO destination, but up until now we have not been able to compete on price with the likes of India and the Philippines," says Pritchard. "With the new incentives we are slowly competing at a cost level as well."

About BPeSA Western Cape
BPeSA Western Cape is a Section 21 company that promotes Cape Town and its surrounding areas as destinations for national and international investment in contact centres and business process outsourcing. Formed in 2001, BPeSA Western Cape is funded by member contributions as well as by local and provincial government.

Editorial Contacts
BPeSA Western Cape
Gareth Pritchard
CEO
Tel: 021 630 1500
Email: gareth@bpesawesterncape.co.za

DUO Marketing + Communications
Patrick Gordon
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Email: patrick@duomarketing.co.za
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