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New incentives for offshoring sector

2 December 2010

The government has announced attractive investor incentives for South Africa's offshoring industry that will reduce the cost of operations in the country by around 20%.

This move further bolsters the country's growing offshoring industry by strengthening its cost competitiveness.

The new incentives make South Africa one of the most attractive global locations in terms of cost. The lowering of costs with incentives, coupled with good English skills and a world class environment have considerably enhanced South Africa's overall business process outsourcing (BPO) offer, especially to serve the UK market.

BPO involves relocating business processes that a company usually performs in-house, such as accounting or customer call centres, to a third-party service provider, to carry out on behalf of the company.

Outsourcing becomes offshoring when the third-party service provider is located in another country.

Enabling investors to cut costs

The new incentives make it significantly cheaper for investors to carry out offshoring operations, at the same time providing flexibility in usage and simplifying administration.

These incentives may be offset against all types of expenditure at the investor's discretion, and are paid over a period of three years for every new offshore job created and maintained in the country.

In addition, a graduated bonus incentive of up to 30% is available for investors that exceed certain job creation targets.

"The South African government is deeply committed to the BPO sector and has put in place attractive incentives through its assistance and support programme," said Trade and Industry Minister Rob Davies. "It has also supported various talent development initiatives to support the growth of the industry."

Davies added that his department expects investors to be attracted by the new incentive scheme, which considerably strengthens South Africa's appeal as an offshoring destination.

The country's offshoring offer is based on quality English speakers, strong cost benefits and a top-class environment. It has also established a strong linguistic and cultural affinity with the UK, ensuring a first-rate, friendly customer connection.

Globally, South Africa has the third-largest English-speaking talent pool among offshore locations and a growing supply of 350 000 graduates annually. For this reason, five of the top 10 global contact centre suppliers have already set up shop in South Africa.

It is estimated that South Africa's offshoring sector will grow to 40 000 jobs by 2015.

MediaClubSouthAfrica.com reporter – get free high-resolution photos and professional feature articles from Brand South Africa's media service.