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R157m govt spend boosts BPO
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Trade and Industry minister, Rob Davies says government has approved grants worth over R157 million for the Business Process Outsourcing (BPO) incentive scheme.
Responding to parliamentary questions, the Department of Trade and Industry (DTI) revealed the grants will be disbursed to ten projects over the next three years and are expected to create more than 11 000 jobs.
“The incentives will be utilised to offset expenditure in order to make applicants more globally competitive, when servicing offshore clients out of South Africa. The grants cover only a portion of the operational costs related to the project. Disbursements are not made upfront but are paid only after confirmation that jobs have been created,” said Davies.
In April, the DTI announced that recent investments of R40 million in the sector had led to the creation of 950 new jobs. Another R42 million in new investments had been committed and this was expected to create another 806 jobs for the sector.
In his written response to the parliamentary questions, Davies added that there were no additional restrictions placed over and above the normal forex regulations on how companies can utilise their grants.
Earlier this year, government’s Industrial Policy Action Plan (IPAP)2 identified BPO as a key sector for investment attraction and job creation. As a result, the DTI reviewed its BPO incentive programme with the private sector and introduced new incentives.
The revised BPO incentive includes a base incentive, which offers a three-year operational expenditure (Opex) grant that tapers down in line with the narrowing cost gap between SA and other destinations. It also includes a graduated bonus incentive, which is offered for greater job creation, if the applicant exceeds certain annual offshore job creation targets.
A recent study by Everest Consultancy revealed that the BPO industry had grown and supported 10 000 offshore related jobs – with expectations this would grow to 40 000 by 2015.
Davies also explained that the jobs created by the beneficiaries have to be in place for a minimum period of three years.
“This implies that if a company creates additional employment at the end of the third year it will have to retain all jobs over a period of five years. There are no further restrictions preventing companies from ceasing operations after the incentive period,” he added.
Companies that will be receiving the grants include Old Mutual Assurance, Amicorp South Africa, Amazon Development Centre First Call Centre Solutions and Call Centre International.
