business process mgmt (bpo) introduction.ppt

BPM-BPO

1. Business Process Outsourcing
and Offshoring (BPO)

2. Contents
•Defining BPO
•Background: South Africa’s window of opportunity
•Gaps South Africa need to address
•South Africa’s strengths, weaknesses, opportunities and threats
•The actions taken
•Sector support programme
–Government assistance programme
–Talent development
–Marketing inititiative
–BPO standards
–2
nd
Economy interventions
–Telecommunication costs

3. Defining BPO
Customer care
HR/
Administration
Payment
services
Finance and
accounting
High end
offshoring
Business knowledge
services
Administration/
General back-
office
–Customer support
–Collections
–Helpdesk
–Telesales and telemarketing
(Inbound/outbound)
–Web sales and marketing other SMA
–Recruiting and staffing
–Hiring administration
–Records management
–Benefits administration
–Payroll services
–Credit/debit card services
–Check processing
–EDI
–Other transaction processing
–Billing services
–Accounting transactions
–Financial reporting and other
–Tax consulting and compliance
–Risk management
–Treasury/financial management
–Engineering
–Design
–Animation
–Network consultancy
–Financial analysis (?)
–Database marketing and customer
analysis
–Biotech research
–Other non proprietary research
–Data entry
–Document management
–Claims processing
–Tax management
–Asset management
–Other (correspondence and
report production)

4. Background: South
Africa’s Window of
Opportunity
–BPO&O global market is expected to grow from $10b to $50-60b by
2008
•40-50% of the growth in banking and insurance
–Result in an additional 3m jobs worldwide,
•200-500k will be contested by SA and other ‘tier 2’ players
–SA is well positioned to exploit this opportunity
•create 65-100k jobs,
•attract $90-175m in real FDI,
•GDP contribution of 0.3-0.5%.
•substantial positive effect on BEE, SMME and Geographic
Equity with respect to job creation

5. Gaps SA needs to
address
•Talent availability: availability of managerial and agent level
talent
•Cost of operation: SA is about $7-8/hour/full time equivalent
agent costlier than lowest cost centers, (e.g., India, Philippines)
•Risk of operation: Perceived issues exist around personnel
security and crime rates in SA
•Set-up assistance: setup assistance and time required to
complete set up requirements
•Regulations: Concerns have been raised by companies on the
flexibility of the labour regulations.
•Third party vendor landscape: Only 4-5 scale players with
experience of migrating international business are available in SA
today
•Marketing activities: Target marketing efforts conducted by
provinces are not competitive in scale and sophistication

6. Strengths Weakness
Opportunity and Threat
Analysis (SWOT)
•Strengths
–Cultural and language familiarity
–Quality of business infrastructure
–Economic and political stability
–Quality of life and attractiveness of location
–International connectivity
–Adaptability
–Entrepreneurial culture

7. SWOT Analysis
•Weaknesses
–Cost of operations (labour and telecom)
–Inadequate government support and investment (e.g. tax, incentives)
–Talent gaps (agent and middle management)
–Quality and cost of transport
–Perceived security risk
–Investor relationship management (marketing effectiveness)
–Lack of scale vendors
–Difficulty of set-up

8. SWOT Analysis
•Opportunities
–Demand surplus in the traditional BPO&O market as India and China face supply
bottlenecks
–Opportunity to offer specialised services in sophisticated industries (e.g. Financial
Services)
–A foundation of multi-language skills
–A location proposition to regional (Africa-based) players
–An alternative location for captive/vendors already present in 1st tier locations e.g.,
India
–Exploitation of country synergies e.g. culture, legal, regulatory
–Exploit existing relationships

9. SWOT Analysis
•Threats
–Pace of delivery against telecom deregulation agenda
–Risk of union resistance (cf. atypical employment) and constraining
labour regulations (cf. overtime)
–Inability to build a strong, coherent industry body
–Inability to open up lower cost quality talent pools and build sufficient
managerial capacity
–Negative perceptions/uncertainty regarding gating criteria and issues
such as HIV, BEE and crime
–Exchange rate volatility

10. The actions taken
•to exploit the opportunity have been largely coordinated through a
partnership between the dti and the Business Trust.
•under the direction and leadership of His Excellency, the Hon. Minister
Mandisi Mpahlwa, MP. (The Minister of Trade and Industry and Director
of the Business Trust).
•The partnership also include key private and public sector decision-
makers, namely:
–Ms Thoko Didiza (Minister of Public Works and Director of the Business
Trust),
–Ms Elizabeth Thabethe (Deputy Minister of Trade and Industry),
–Mr Derek Cooper (Chairman of Standard Bank and Director of the Business
Trust) and
–Mr Eddie Funde (Chairman of the SABC and Chairman of the industry body,
Business Process enabling South Africa-BPeSA).
•Operations are directed by
–Dr.
 Raymond Ngcobo (Chief Director for Strategic Competitiveness Unit,
Enterprise and Industry Development Division of the dti),
–Mr. Brian Whittaker (CEO of the Business Trust) and
–Mr Mfanu Mfayela (CEO of BPeSA).

11. Sector Support Programme

–Five work streams were identified:
•Government assistance and Support
•Talent development
•Marketing
•Industry mobilisation
•BPO&O standards
–Additional work streams have been identified
•Telecommunications pricing packages for the
BPPO&O sector
•BPO 2
nd
economy strategy

12. GAS Programme
•The GAS programme was designed to support the development of the
BPO&O sector, through:
–Providing incentives to enhance the competitive advantage
–Close the cost gap for BPO&O operations when compared to other
BPO destinations such as India and Philippines
–Address market failures that result in the high cost structure
•Approved in December 2006 by Cabinet
–Full roll-out in March 2007
–The objective of the investment incentive is to attract BPO&O
investment that creates employment opportunities.
–The grant is provided depending on the value of qualifying
investment cost and employment creation.
–The grant ranges between R37,000 and R60,000 per seat and is
offered to local and foreign investors establishing projects that aim
primarily to serve offshore clients.

13. Benefits
•INVESTMENT GRANT
Employment
Created
Qualifying
Investment Costs
Per Seat
Grant Per Seat
200 – 499 At least R74,000 R37,000 – R44,600
500 > Greater than R89,200R44,601 – R60,000
200 > Less than R74,000 R37,000 - R52,300
or 50% of agents’
salary costs for 2yrs,
whichever is lesser

14. Talent Development
• The most critical element of a distinctive value proposition – the
ultimate basis for competition “TALENT AVAILABILITY”
• SA starts with a good foundation of trainable people, however
considerable training is needed to deepen the talent pool
• There is a need for substantial government investment through
– Company specific training and
– work readiness training
• Work Readiness Programme known as Monyetla is an initiative
between the dti and the Department of Labour
– aims to take unemployed matriculants or graduates through a process
of learning work-readiness skills.
– in its pilot phase aiming to train 1000 learners at a cost of R15
 000 each
• The Training and Skills Support Grant is directed towards the cost of
providing company specific training (as opposed to industry wide
training) up to a maximum of R12, 000 per agent.
– The incentive grant is over and above the assistance obtained through
the Sector Education and Training Authorities (SETAs) and is
complementary to the BPO&O Investment Grant.

15. Previous and proposed
initiatives

DoL previous Initiatives
No Of
Learners
Estimated Costs
Rand
Services SETA 3200

80,000,000
NSF Skills Development
Support programme (part of
DTI Small & Medium
Enterprise Development
Programme Incentive
Programme 177 7,873, 000
NSF –through DoL Gauteng
South Provincial Office 980

8,805,000
Totals 4,357 96,678,000

16. Previous and proposed
initiatives

DoL proposed initiatives
No of
Learners
Estimated Costs
Rand
Gauteng Provincial
Government (Part of NSF
funded Strategic Project) 5000

20,835,000
Western Cape Provincial
Government through Call the
Cape. (Part of NSF funded
Strategic Project) 200

2,000,000
Services SETA (Fusion) 211

3,165,000
Services SETA
(DTI/Business
Trust)(Monyetla) 1000

15,000,000
Totals 6411

41,000,000

17. Marketing
• To persuade the best companies to do business in S.A. and remain
in S.A by:
–Understanding and properly communicating the SA Value
proposition.
–Encouraging regional and industrial diversity
–Ensuring a competitive environment ( one stop shop)
–Removing Regulatory obstacles
• The initiative straddles both targeted and broad-based marketing.
 
–Targeted marketing focuses on attracting and securing selected
high impact foreign investors, who will in turn create a
groundswell of other investor interest.
–Broad-based marketing encompasses the supporting of
government and industry initiatives, to raise South Africa’s
BPO&O global profile, with the aim of securing a dominant Tier 2
position.

18. BPO&O Standards
•A set of 3 new standards geared towards service quality
•Address Inbound and Outbound Contact Centres and Back-
Office Processing Operations standards in four categories:
•Leadership and Customer Service Management
•Human Resource Management
•Operations Management
•Technical Resource Management
•SA Bureau of Standards (SABS) is now turning these into
national standards
•ISO is interested in the standards for the first global standard for
BPO&O

19. BPO in the 2
nd
Economy
•Need to shift from concentration in main Metropolitan
areas (JHB, DBN and CT) to ensure equitable distribution
of benefit
•New designated areas have been identified to direct some
investment to depressed communities
•Criteria for selection
–Levels of unemployment and poverty
–Availability of buildings
–BPO potential in terms of local economic development
–Availability of ICT Infrastructure
–Talent availability and development

20. Identified sites

Identified Site Area

1. King Sabata FET,

Umtata, Eastern Cape

2. College of C.T. FET, Athlone/Crawford

Western Cape

3. Atlantis Education & Training Institution

Western Cape

4. Esayidi FET

Gamalakhe, KZN

5. Sekhukhune FET

Burgesfort, Limpopo

6. Nkangala FET

Siyabuswa, Mpumalanga

7. Umzinyathi District Municipality

Endumeni LC, KZN

8. Bohlabelo

Bushbuckridge LC, Mpumalanga

9. Kgalagadi (Satelite for Kimberly)

Northern Cape

10. Galeshewe (Kimberly)

11. Mdantsane Buffalo City, Eastern Cape

12. Ixopo (TBA)

Sisonke District, KZN
13. East London IDZ

21. Telecommunication costs
•Working with DoC on infrastructure for
designated areas/ICT hubs
•Negotiating with Telkom for a developmental
pricing framework
–Large offshore clients (>1000 seats)
–Domestic clients
–SMME’s
–Designated areas
•Work is ongoing

22. QUESTIONS ???