What makes Cape Town attractive to the international BPO industry
Cape Town, – As the global economic outlook “darkens significantly”, according to International Monetary Fund chief Kristalina Georgieva, business process outsourcing (BPO) has become crucial for companies seeking to streamline costs and processes.
With consumers suffering as commodity prices skyrocket and inflation hikes in Western economies occur every other month, businesses, particularly those in the UK and the USA, are eyeing different markets to alleviate financial pressures.
Firmly on their radar is Cape Town in South Africa, already home to a thriving BPO sector.
Clayton Williams, CEO of CapeBPO, a driver of the BPO industry in Cape Town and the province of the Western Cape, points out that wage constraints resulting from Brexit have actually helped grow the local industry.
“UK-based businesses are struggling to attract workers into the sector in the UK due to minimum wage requirements. Due to cost and margin pressures, businesses are forced to offshore operations to cheaper locations,” he says.
“Given South Africa’s experience and success with UK clients and customers due to factors like cultural affinity, accent, similar time zones and wage arbitrage, the location is an obvious choice.”
South Africa on numerous occasions has been named Global Destination of the Year by the Global Sourcing Association as a pocket of excellence for BPO. In 2021 it was also ranked the top global destination for BPO by the annual Ryan Strategic Advisory Front Office BPO Omnibus.
Cape Town hosts 60% of the country’s BPO centres, employing more than 50,000 workers. In June it was also rated the most sustainable city in Africa in the Corporate Knights Sustainability Cities Index 2022 report, noted for its efforts in terms of air quality, emissions, solid waste generation and sustainable policies, among others.
Currently there are 69 information and communication tech companies in the Cape Town central business district (CBD) alone, of which 25 are call centres. Included in this number are international brands like e-commerce giant Amazon, Lufthansa inTouch and Global Load Control.
“Cape Town, especially the CBD, is a known BPO hub,” says Rob Kane, chairman of the Cape Town Central City Improvement District (CCID), a public-private partnership and non-profit organisation that is mandated to manage and promote Cape Town’s CBD.
“Downtown Cape Town is a recognised technology, BPO and e-commerce hub, with reliable infrastructure, fast internet speeds and a commitment to supporting a young workforce. The city is home to the most tech start-ups on the African continent, and the BPO sector supports call centres for global companies and online retailers with a steady pipeline of call-centre employees.”
With many BPO businesses forming part of the CBD’s night time economy, the CCID is pulling out all the stops to create an enabling environment for workers. Cape Town’s famous Long Street is being reclaimed for pedestrians, beautification projects are under way, and business owners are given peace of mind by the presence of CCID Safety and Security patrols.
Particularly impressive is that Cape Town created almost 7 000 jobs in the BPO sector in 2020 despite South Africa grappling with the initial waves of the Covid-19 pandemic.
Williams says BPO organisations were able to continue to operate as essential service providers under lockdown regulations.
“The inability of the Philippines to deliver services to clients due to very strict government lockdown regulations forced clients to seek alternative locations globally as a risk mitigation measure to diversify their concentration risk. SA and the Western Cape were identified as suitable locations due to capability relative to customer experience,” he says.
Cape Town is desirable as a BPO destination for several reasons, Williams says.
The first is that the city has matured in terms of customer experience capabilities across multiple verticals, including retail, utilities, telecommunications and travel. Secondly, there is excellent local and provincial governmental support for the city. Finally, there is a strong emphasis on investing in skills development programmes.
These views are shared by Ian Ohlson, a director at Lufthansa InTouch Cape Town, operational in the inner city since 1999 and boasting a staff complement of 573.
“We chose the CBD due to the various options available for transport, the close proximity to shops, banks and lifestyle options. Investors continue to support the BPO industry in Cape Town and more and more companies are bringing businesses to the city due to the awesome track record the BPO has set.”
The talent pool available in Cape Town also allows the company to service clients in five different languages – English, German, French, Dutch and Hebrew.
“The talent in South African is diverse and agile, which is required for our ever-changing BPO environment.”
Cape Town’s reputation as a BPO hub is further enhanced in that most companies that opened offices in the city in the past five years have expanded their operations, says Baker Street Properties commercial director Dave Russell.
“Companies will continue to strive to provide the best service at the best price and because of this South Africa, and in particular Cape Town, will continue to be an attractive option for the BPO sector.
“Companies based in the UK and other first-world countries can expect massive discounts on the rent paid for quality offices in South Africa relative to the rent paid for comparable space in the UK.”