ADAM CRAKER: SA can learn from India’s business process outsourcing success

The 25th Brics summit to be held in Johannesburg later this month has attracted a lot of attention, but an unavoidable truth is that the Brics alignment simply doesn’t inspire the economic optimism it used to when SA joined in 2010.

With the economic uncertainty and geopolitical instability we are experiencing it is difficult to tap into the original optimism the Brics alliance ignited. Yet some of our Brics partners offer important economic lessons for SA. The grouping does after all share a number of similarities when it comes to economic positioning, and this is part of what inspired its initial formation and growth with the aspiration of catalysing a new world order.

When the Indian delegation to the summit engages with its SA counterparts it does so from a base of hard-earned economic achievements, including success as the world's go-to country for business process outsourcing (BPO). India’s BPO boom started in the late 1980s, and it has been a continued source of job creation, innovation, revenue and contributor to India’s GDP throughout.

India is the home of almost 60% of global BPO services. We’re all familiar with India’s thriving call centre industry, but the sector extends far beyond telesales and customer service. A vast variety of technology and internet services falls under the banner of BPO. As an idea of the scale of its success, BPO revenue in India is projected to reach $6.19bn in 2023. And it is expected to grow nearly 11% a year, leading to a total market value of $10.4bn by 2028.

If we pay attention, India’s BPO success story offers a road map for SA's own burgeoning BPO sector and broader inclusive economic growth. Gone are the days when offshoring services was considered a stopgap measure for cost-saving. Analysts show us that global outsourcing is now an integral part of modern business structures. It offers long-term advantages and makes solid business sense, and we need to foster that growth.   

Let's start with the good news. SA shares some similarities with India that are vital to facilitate BPO growth. We have a sizeable youth population, eager to work — an essential ingredient in developing BPO services. Our youth demographic possesses the technological curiosity that is needed in the industry, and with the right skills training this can quickly convert to productive work. Our pool of young talent also has the English language skills required to offer services to international companies. English is a first or second language for many young South Africans, ideal for communication with top BPO clients based in the US, UK and Australia.

SA also offers reduced labour costs to these clients. Compared to more developed countries we are an attractive destination for companies looking to reduce costs without compromising on service quality. When it comes to infrastructure our country already has technological systems in place that support BPO services. Our levels of internet connectivity and data security provide a solid base for the industry to grow even as we battle load-shedding by shifting to alternative energy. As research by Business Process Enabling SA (BPESA) clearly shows, countries such as the UK, US and Australia — traditional “brain drain” lures of local talent — already rely on our services, trusting South Africans here at home with a significant amount of their work.

Where we can learn the most from India’s example is its focus on a quality education system, coupled with strategic government support. While there are, unquestionably, many problems with the education system in SA, the potential for harnessing the technological aptitude of the youth is truly immense. Last year, Harish Lala, senior vice-president and regional head for Africa at Bombay-listed Indian software and services giant Zensar Technologies, agreed that SA can follow India by using entry-level BPO services and then expanding into broader IT services. But he underscored that a central requirement for this to happen will be getting scholars in grades 8 and 9 excited about technology subjects and eager to start careers in tech-related services. This needs to be a priority within the department of basic education, and at all schools.

SA’s BPO industry has enjoyed some government support, but there is so much more that can be done to encourage growth on a regulatory and legislative level. India made sure it had a tax-friendly structure that welcomed investment in BPO. Locally we can offer incentives such as a more attractive tax rate, a variety of capital grants, an integrated system of BPO monitoring, training and advisory assistance, as well as reduced red tape so that companies see SA as a place where key elements of their operations can be based with certainty.

The constantly increasing global demand for BPO services is something SA should and can take advantage of, but we must not waste time. Market forecasts in this industry are impressive, with growth projected for all our Brics partners. So when attention focuses on the imminent Brics summit our representatives should remember that India offers wisdom and a practical example for economic growth that we must learn from.

BPO should be embraced as a way to grow our economy and hopes. We need to use the time now to position SA as a forerunner in this growth, and lead a new world order in BPO from the African continent.

• Craker is the CEO of IQbusiness.