South Africa BPO Value Proposition WNS / dti event SA House 13 June
South Africa s BPO offering European Outsourcing Association Awards 2013 (Winner) - South Africa, Offshoring Destination of the Year National Outsourcing Association UK Awards 2012 (Winner) - South Africa, Offshoring Destination of the Year National Outsourcing Association Outsourcing Professional - 2013 (Shortlisted) - Skills Development Project of the Year Key service providers present in SA Key clients sourcing services from SA 2
South Africa s value proposition for BPO delivery Mature domestic market World-class strengths in financial services and legal domains Large experienced pool Large scale English language talent pool with neutral accent Distinctive strength in driving superior customer experience Cultural affinity with UK 22. Deep domain 33. Significant skills cost savings Costs 50 70% lower than source markets Market-leading incentives that reduce costs by 20% Narrowing cost differential with low-cost locations 1. Skilled, Englishspeaking talent pool 5. Robust enabling environment 4. First World experience Attractive investment climate and strong public sector support Rapidly improving telecoms Political and socio-economic stability First World infrastructure Superior quality of life for expats. Similarities with UK Time zone similarities and ease of access 3
1 Skilled, English speaking talent pool South Africa is among the Top 3 global locations that can support English language skills at scale Annual supply of fresh talent for English language BPO 2011; 000s India 4,400 Philippines South Africa Malaysia 160 450 370 370,000 BPO industry addressable workforce added annually across educational streams Egypt 70 ~3.6 million English speakers Kenya 30 Sri Lanka 20 Northern Ireland 12 Note: Represents qualified talent with good English language proficiency Source: Everest Group Research (2012) 4
2 Deep domain skills The South African talent pool is distinctive in specialized skills, particularly in financial services Examples of specialized skills in the Financial Services Sector Number of Chartered Accountants 2012; 000s Number of CFA charter holders 2012; Total number Number of qualified actuaries 2012; Total number India 170 700 240 Philippines 140 120 65 Czech Republic 4 100 65 South Africa 30 1,150 900 Pockets of strength in specialized skills related to Financial Services, Legal and Healthcare domains Source: National CA Institutes, CFA Institute, National Actuarial Societies 5
3 Significant cost savings South Africa offers 50-60% cost arbitrage from source destinations Direct operating cost per FTE for English contact centre services 2012; UK 000s per annum per FTE 35-37 26-28 21-23 16-18 50-60% 14-16 12-14 11-13 8-11 8-11 We are willing to pay a marginal risk premium of a dollar and few cents in SA over traditional lowcost locations...the gap is not worth risking our UK customer portfolio Leading UK company Though we had lower cost options, we chose SA given the first world experience, and quality of English skills. Further, SA provided us attractive savings (~50%) Leading UK company UK Tier II City Northern Ireland Czech Republic Poland South Africa Egypt Malaysia Philippines India Costs 40-45% lower than near-shore locations in the UK (e.g., Northern Ireland) Costs 10-20% lower than locations in Central & Eastern Europe (Czech Republic, Hungary, Romania) Note: Exchange rate used: 1 GBP = 12 ZAR (Calculated based on daily closing averages during 16-May 11 to 15-May 12) Source: Everest Group Research (2012) 6
3 Significant cost savings Post incentives, South Africa s cost of operations reduce by 15-20% and make it comparable to costs in established low-cost locations MARKET AVERAGES FOR CUSTOMER SERVICE Fully loaded cost per FTE 2012-13; UK 000s per annum per FTE Bake in the incentives offered in SA and it s a no brainer against select competitors even on a cost basis Sourcing Executive in Leading UK retailer 14-16 ~3.5 10.5-12.5 12-14 7.5-9.5 Post incentive 2 SA cost pre incentive Incentive 1 SA cost post Egypt 3 India incentive 1 South Africa incentives are provided on basis of training and employing local talent 2 India s incentives are provided as tax rebates based on reinvestment and additionally for centers being based in a SEZ 3 While incentives exit in Egypt, they vary significantly by company as there isn t any publically disclosed uniform incentive policy Note: Exchange rate used: 1 GBP = 12 ZAR (Calculated based on daily closing averages during 16-May 11 to 15-May 12) Source: Everest Group Research (2012) 7
3 Significant Cost Savings Incentives provide significant financial benefits and flexibility in usage Structure & Quantum Eligibility Number of offshore jobs created each year Incentive 2012/13 2013/14 2014/15 2015/16 Upto 400 Base Incentive 1 R40,000 R32,000 R32,000 R24,000 401-800 20% one-off bonus Greater than 800 30% one-off bonus R 104,000 R 88,000 Bonus calculated for each job between 401 and 800 2 Bonus calculated for each job in excess of 800 2 Local and foreign investors registered as legal entities in South Africa that create at least 50 offshore BPO jobs over a period of 3 years and are delivering services to clients located outside South Africa Types of business processes that can benefit from the incentives include Back Office Processes, Contact Centres, Finance and Accounting Services, Human Resource Functions, IT and Technical Services and other Specialist Services Disbursement & use of funds Can be used to offset against all types of expenditure at investor s discretion Disbursed twice a year for three years for each offshore job created and maintained 1 Base incentive paid for 3 years on actual jobs created and sustained 2 Bonus incentive paid once in the year in which the bonus level is first achieved 8
4 First world experience South Africa offers a First World experience in terms of its infrastructure and quality of life Excellent quality of infrastructure roads, power, connectivity, retail and office buildings Good quality of life with high standard of education, entertainment and healthcare facilities, very similar to those in the UK Low cost of living: Johannesburg is ranked at 131 and Cape Town at 158 out of 214 cities on the worldwide cost of living index 1 (Mercer 2011) (lesser than Prague, Dublin, Delhi, Kuala Lumpur and Cairo) Compatible time zone with UK (GMT+2) Ease of access with more than 10 daily flights between UK and South Africa 1 Lower the rank, lesser is the cost of living. (Rank 1 would be the most expensive city) 9
5 Robust enabling environment Stable telecom infrastructure with steady addition in undersea cables and rapidly reducing costs Improvement in telecom connectivity Number of undersea cables has doubled in the last two years with two more high capacity cables due to be active in the near future Reduction in telecom costs by 90% since 2003. ~50% drop since 2008 Expected to reduce further by 15-20% annually (2013-2015) 100% SLA being provided on telecom contracts Telecom providers providing end to end solutions from UK to any SA location Reliability and redundancies were issues of the past. The quality of service has now improved a great deal. My costs have reduced by 50%. BPO Executive in-charge of SA operations Source: Telcommunication service providers, Africa Undersea Cables research 10
BPeSA is developing a Skills Plan with industry Approximate Numbers Estimated NQF Level Skills Content / Focus The BPeSA Western Cape s Duration Board is comprised of representatives from leading global service providers and Global In-house Centers (GIC) in the province: 15 2-3 years 8 Executives/Senior Managers Gareth Pritchard CEO BPeSA Western Cape Fagri Semaar Chairman BPeSA Western Cape Bruce von Maltitz 1Stream Lisa Roos Merchants Franco Cotumaccio Full Circle/Capita Scott Sommers Amazon Johann Kunz WNS Kobus van der Westhuizen 4-6 weeks Aegis 5 Nicky Toulouras Capita 10,000 2-4 weeks 4 Nazli Laatoe City of Cape Town Dermot Grazebrook IQ 1 week Business 2,3 Regan Adams RCS 100 <12 months 6,7,8 Operations Managers 40 100 200 100 100 <1 week 6 IT MI QA WFM Coach 1,000 4 months 4,5,6 Supervisors Mkt Sale s Service Collections Retentions Data Functional 2 weeks 2,3 Soft Skills/Technical Communications 10,000 2 weeks 2,3 Work Readiness 2 weeks Top up Menu 11
BPeSA Report Findings Overview (May 2013) 12
BPeSA Report Findings Overview (May 2013) 13
Invest in South Africa dti video 14
Please do not hesitate to contact us t: +27 (0) 21 427 2900 Email: info@bpesawesterncape.co.za Website: www.bpesawesterncape.co.za Facebook: www.facebook.com/bpesawesterncape Twitter: twitter.com/#!/bpesa YouTube: www.youtube.com/user/bpesawesterncape 16th Floor, The Terraces Building, 34 Bree Street, 8001 Cape Town