A new public-private partnership (PPP) agency is on the cards to spearhead the marketing of South Africa as a business-process-outsourcing (BPO) or call-centre alternative to countries such as India, China and the Philippines.

Industry stakeholders met yesterday to discuss the finalisation of a sector strategy for the BPO industry, which a recently released study suggests has the potential to create some 100 000 direct (25 000) and indirect (75 000) employment opportunities by 2009. At present, there are some 4 000 people working in the industry locally.

The strategy is likely to be presented for vetting to the Cabinet Lekgotla in July and is expected to focus on ways of overcoming some of the current constraints to BPO investment as well as outline incentives to drive growth in the sector.

The agency concept, meanwhile, is said to be advanced and could be up and running in a matter of months. It is likely to focus on presenting South Africa's unique value proposition to prospective call-centre investors internationally as well as support initiatives to broaden the skills pool, through training of prospective employees in the industry, possibly even at secondary-school level.

The fast-expanding English-language BPO market currently has revenues of about $10-billion yearly, but is expected to growth to around $50-billion by 2008. The South African government has identified it, along with eleven other sectors, for specific attention, with President Thabo Mbeki promising in February that specific development plans would be in place by the end of the year. Other sectors to receive attention include tourism, chemicals, ICT, telecoms, agro-processing, community and social services, wood and paper, appliances, retails and construction.

Renewed efforts in the BPO sector coincided with the release yesterday of a public-private study into the opportunities that could arise in the sector over the next five years.

The study, entitled 'South Africa Calling: South Africa's Global Business Process Outsourcing & Offshoring Opportunity', was compiled by McKinsey & Company and was commissioned by the City of Joburg, in partnership with the ComMark Trust and the SA Foundation (SAF).

Speaking at a briefing held at the SAF's offices in Parktown, Johannesburg, yesterday, McKinsey's Vikas Sagar suggested that South Africa was well placed to get its 'fair share' of a supply-demand gap, which could be as large as 500 000 jobs between now and 2009.

He said South Africa could already deliver call-centre services that were between 20% and 30% cheaper than those that could be achieved in the US and the UK and that its political and economic stability, well established infrastructure, and a cultural affinity with the main English-speaking markets, provided it with some good advantages as it sought to compete with other investment locations.

Sagar indicated that the supply gap would emerge due to a shortage of suitable 'talent' in the traditional markets of India, the Philippines and China, which, together, were still set to absorb the bulk of the two-million new jobs that were likely to arise in the industry over the next five years.

However, he warned that South Africa would face increasingly stiff competition from countries such as Malaysia, the United Arab Emirates, Russia, Singapore and even Botswana, which were all positioning themselves as 'tier two' suppliers into the industry.

He suggested that for South Africa to get its fair share of this market it would need to make five key interventions:

- Market the value proposition, particularly to key BPO consumers such as the banks and insurance companies.

- Deepen its pool of talent so as to lower labour costs in the sector.

- Set up incentives to attract new investment.

- Establish accreditation and governance systems to assure quality.

- Create a focused stakeholder body to facilitate growth in the sector.

Cost competitiveness also emerges as a key constraint, with the study suggesting that these could be overcome through incentives, some labour-market flexibility, particularly regarding working-hour arrangements, and further liberalisation and deregulation of the telecoms industry to lower call costs. At present South Africa is about $8 a seat more expensive than competitors in India, principally due to the small talent pool (many of the employees in the sector are graduates versus matriculants in India), and South Africa's relatively high cost of telecoms.

Sagar suggested that a public-private effort to increase the availability of skills would be key to driving down costs, adding that the deregulation of the South African telecoms industry, currently under way, will also support this process.

It emerged yesterday that the initiative had the backing of the Business Trust, which was pushing for the establishment of a new agency to focus on the marketing and training imperatives.

Business Trust CEO Brian Whittaker revealed that the trust's next board meeting would consider a business plan to put its financial muscle behind the sector strategy and the new PPP agency.

He said that the process required a 'viable partnership vehicle' to drive the process, pointing to a similar partnership between business and government in the tourism sector, where the Business Trust has supported the endeavours of South African tourism to market the country as a destination of choice.

He said the trust was also considering making available 'discretionary funds' for specific training and marketing projects.

Industry association, the South Africa Contact Centre Community (Sacccom) has also put it full weight behind the initiative, with CEO Mfanu Mfayela stressing the need for a broad partnership between the existing regional associations, national government and the private sector to accelerate growth in the BPO sector.

Mfayela said there was significant support for a nationally aligned programme as well as a new agency to spearhead efforts around attracting BPO investors to South Africa.

Joburg 2030 programme manager David van Niekerk added that the city, which initially pursued the initiative as part of its own efforts to accelerate growth, was fully committed to an approach that 'sells South Africa first and then Joburg'.

“While the study started as a local initiative, we are pleased that it has been elevated to a national level,” he added.

SAF's CEO Michael Spicer stressed the urgency for action, saying that the BPO industry was moving at 'Internet speed' and that 'decisive and incisive' interventions were needed so as to ensure that South Africa didn't lose out.