South Africa is fast becoming a recognised key player and favoured ‘go-to’ destination for Business Process Outsourcing (BPO). Cape Town is one of the leading cities for BPO and is the preferred location for many domestic and international operation expansions.
Green light for business relocation to Cape Town
There are many reasons that Cape Town is the ideal place to relocate your business. Cape Town is a beautiful, multicultural city to which people have been flocking from all over the world. Cape Town also is a multilingual city. In addition to the two important official languages, English and Afrikaans (related to Dutch), German, French and Portuguese are widely spoken throughout South Africa. This mix of languages benefits the customer service industry immensely.
The customer service industry is thriving in Cape Town, and has risen in the double-digit percentage range over the last two years. It comprises a total of nearly 40 000 employees at present. At the end of April 2013 South Africa won the “Outsourcing Destination 2013” award, which was assigned by the European Outsourcing Association (EOA). This award reflects the growth of off-shore call-centre services in South Africa, specifically in financial services, healthcare, and the travel industry. Teleperformance, Serco and Capita are three of the world’s largest business process outsourcing companies which have invested in, and are operating in Cape Town.
South Africa hosts a number of local and international brands, taking advantage of the business process outsourcing infrastructure South Africa has to offer. Brands that make use of business process outsourcing in South Africa include: Amazon, ASDA, Bloomberg, British Gas, Shell, Shop Direct, Swissair, Metropolitan Health, Wonga, and Woolworths, to name a few.
A major reason for business relocation to Cape Town is the low costs involved. Companies wanting to outsource their call-centres are able to secure and negotiate better pricing, terms and service. One of the reasons for these low costs is the fact that South Africa’s labour costs are considerably low. Salary and wage inflation has remained stable and also lower than other offshore locations, such as India. The weak South African Rand, along with the appealing government incentives, has led to cost-savings of around 50-70percent in comparison with European call-centres.
The South African Department of Trade and Industry has provided incentives to support foreign investors. These incentives have led to Cape Town being an even more sought-after BPO destination. For each offshore job created and sustained, a tax exemption is paid for three years. New offshore investors coming to the Western Cape for more than six months are provided with free telecommunication services for the first six months of operation to reduce their BPO costs. Customs and duty refunds, as well as zero rating for value added tax (VAT) on exports of goods and services, are promised.
Another reason that the depreciation of the South African Rand is good news for BPO companies is that it has improved South Africa’s cost competitiveness in the outsourcing community. The weaker Rand attracts off-shore companies, not only because it is cost effective to set up BPO companies, but also because it is cheap to tender for business internationally. The weak Rand has decreased the costs of establishing offshore business in South Africa, thus making it a perfect time for new investors to join this leading BPO destination.
South Africa experiences above average productivity. In South Africa the employment legislation is flexible regarding working hours. It is considered acceptable and common for overtime to be unpaid. The legal maximum is 45 hours per week, which is longer than the average working hours of UK agents (37.2) and Indian agents (43.3). Any restrictions on working hours and overtime don’t apply once a staff member is paid more than R7 417 a month. On average employees work 168 hours a month and team leaders 175 hours a month.
Cape Town also has low absenteeism from work, as shown in a survey conducted by “callingthecape”. The survey revealed that the percentage of working hours lost due to absenteeism was 5.9%, which was lower than outbound contact centres. This contributes to the higher level of productivity. Staff turnover is significantly lower than in European locations. As a result, the quality of the work has improved, which increases the saving of time and money.
Corporate Work Permit
The corporate work permit, also known as a company work visa, gives a company based in South Africa the right to employ a prescribed number of foreigners in specific positions. The company work visa is ideal for BPO companies that are moving their customer service centres to South Africa as it offers the opportunity to employ a large number of foreign employees. Work permits are granted to these employees individually through a simple process. The company work visa is issued to an employing company, not the actual employee. The company work visa is usually issued for a maximum period of three years. Life partners, spouses, and dependents are able to accompany the foreign national on the individual company work visa. Once a company work visa is obtained, the employees themselves may then apply for individual work permits. This process is much more efficient and cost-effective than applying for a work permit without a company work visa.
Technology growth in South Africa
South African telecoms improvements have helped make the country more attractive as a BPO destination. South Africa is now ranked 23rd in telecommunications development in the world. The bandwidth to South Africa has increased twenty-fold, and is now at the European level. In addition, from 2003 to 2009, telecommunications costs fell by 85 percent, and these are likely to decrease further in the future.
Should you be interested in relocating your business to South Africa, the corporate work permit or the business permit for South Africa, please feel free to contact our corporate immigration division Initiate Corporate Immigration. We will gladly help you with the process.
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Michaela heads up the marketing department for Initiate Holdings. An expat herself she understands the unique challenges immigrants are facing in South Africa.
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