Budget likely to provide for call-centre incentives 
Linda Ensor

Political Correspondent

CAPE TOWN — New incentives to encourage the establishment of business process outsourcing, or call centres, are being devised by the trade and industry department for probable inclusion in the 2006-07 national budget.

The proposed incentives emerge from the department’s draft industrial policy, which will be taken to the cabinet for approval next month and will, among other things, encourage the establishment of SA as a global call-centre hub.

Trade and industry department deputy director-general Lionel October said this week the incentives were aimed at local and foreign investors, and at raising direct employment in the sector from the current 60000 to 85000 jobs, as well as creating up to 75000 indirect jobs.

He said the proposed incentive would be in the form of subsidies to cover the cost of training during the first few months after a call centre had been established, and to assist with the acquisition of land.

Both forms of assistance will contribute to lowering the cost of doing business in SA. However, while the country scores highly on quality, it is unable to compete with others such as India because of the high call rates charged by Telkom.

October said the subsidies would not carry on indefinitely, but would last only until SA had developed a critical mass of call centres and would offer a slight cost advantage over the four- to five-year period expected for Telkom’s rates to decline under pressure from the second national operator.

Talks will take place with the national treasury on the proposal early next year with the expectation that provision will be made for it in the February budget.

Services Seta CEO Ivor Blumenthal has said SA would not become internationally competitive without government support.

Only 5000 current industry employees work for foreign companies.

Business process outsourcing is one of the key growth sectors to be targeted in the Accelerated and Shared Growth Initiative being developed by Deputy President Phumzile Mlambo-Ngcuka.

The draft industrial policy proposes greater government and parastatal intervention in the economy to boost growth, particularly in hi-tech sectors such as nuclear, aerospace and biofuels.

October said the policy had been through the National Economic Development and Labour Council, and both business and labour were broadly supportive of its approach.