South Africa’s business process outsourcing and offshoring industry had significant potential to boost employment numbers in line with the country’s New Growth Path, but could be paralysed by the proposed amendments to labour laws, said industry body Business Processing enabling South Africa (BPeSA) on Wednesday.

Speaking to Engineering News Online at this year’s National Outsourcers Forum, BPeSA CEO Bulelwa Konyana said that the association had been working closely with the Department of Trade and Industry to position the sector for international growth.

The department had launched a R1-billion incentive scheme over the next five years to increase South Africa’s competitiveness in the international market.

Central to the initiative is a tax-free subsidy of R112 000 for every full-time job created by companies able to create 50 or more offshore opportunities over the next three years. By the fifth year, the incentive would taper down to R88 000 for each new employment opportunity created. Additional bonuses would also be paid to company’s able to create more than 400 jobs.

Konyana said South Africa’s services would be about 70% cheaper than that of the UK, which would enable the sector to add another 30 000 offshore jobs in the next five years.

Currently, the sector employs around 200 000 people domestically and holds around 10 000 seats in offshore markets, contributing less 0,5% to the country’s gross domestic product (GDP) growth.

Outsourcing and offshoring had significantly boosted employment rates in countries such as India and the Philippines.

India now employs between 800 000 and one-million people in the sector, contributing about 7% to the GDP.

Konyana said that the $42-billion global offshore market, would increase by a further two-million jobs in the next five years, with opportunity increasing ten-fold in the next decade.

“This is indeed an opportunity that South Africa should take advantage of, as it is uniquely positioned to tap into this growing industry.

“The country provides investors with significant cost savings, a large talent pool that speaks English and infrastructure on par to that of Europe.”

But, the country could see this opportunity slip through its fingers if the new labour legislation amendments as proposed by Labour Minister Nelisiwe Oliphant in December were to become law.

The amendments relate to all the current Labour Acts and seek to introduce a new Employment Services Bill, with the main intention of increasing regulation of all temporary employment services, including outsourcing.

“These amendments would be detrimental to the industry and BPeSA will not accept them. We have launched an objection with the Labour Department, and will be looking to engage with the department, as well as the Department of Economic Development, this year.

“The problem is that people are not always fully informed on the practice of outsourcing and offshoring and also do not know that this sector speaks directly to the developmental needs of this country,” concluded Konyana.