South Africa BPO

Value Proposition

WNS / dti event

– SA House 13 June

2

Confidential

Key service providers present in SA Key clients sourcing services from SA

South Africa’s BPO offering

European Outsourcing Association Awards 2013 (Winner)

- South Africa , Offshoring Destination of the Year

National Outsourcing Association Outsourcing Professional - 2013 (Shortlisted)

- Skills Development Project of the Year

National Outsourcing Association UK Awards 2012 (Winner)

- South Africa , Offshoring Destination of the Year

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Confidential

South Africa’s value proposition for BPO delivery

3. Significant

cost savings

4. First World

experience

5. Robust enabling

environment

2. Deep domain

skills

1. Skilled, English-

speaking talent pool

Large scale English language

talent pool with neutral accent

Distinctive strength in driving

superior customer experience

Cultural affinity with UK Costs 50–70% lower than

source markets

Market-leading incentives

that reduce costs by 20%

Narrowing cost differential

with low-cost locations

First World infrastructure

Superior quality of life for

expats. Similarities with UK

Time zone similarities and

ease of access

Attractive investment climate

and strong public sector

support

Rapidly improving telecoms

Political and socio-economic

stability

Mature domestic

market

World-class strengths

in financial services

and legal domains

Large experienced

pool

1

2 3

4 5

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India

Philippines

South Africa

Malaysia

Egypt

Kenya

Sri Lanka

Northern Ireland

South Africa is among the Top 3 global locations that can

support English language skills at scale

Skilled, English speaking talent pool

Note: Represents qualified talent with good English language proficiency

Source: Everest Group Research (2012)

Annual supply of fresh talent for English language BPO

2011; ‘000s

370,000 BPO industry

addressable workforce added

annually across educational

streams

~3.6 million English speakers

4,400

450

370

160

70

30

20

12

1

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The South African talent pool is distinctive in specialized

skills, particularly in financial services

Pockets of strength in specialized skills related to Financial Services, Legal and Healthcare

domains

2 Deep domain skills

Examples of specialized skills in the Financial Services Sector

Number of

qualified actuaries

2012; Total number

Number of Chartered

Accountants

2012; ‘000s

Number of CFA

charter holders

2012; Total number

170

140

4

30

India

South Africa

Philippines

Czech Republic

700

120

100

1,150

240

65

65

900

Source: National CA Institutes, CFA Institute, National Actuarial Societies

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South Africa offers 50-60% cost arbitrage from source

destinations

8-118-11

35-37

26-28

21-23

16-1814-16

12-1411-13

UK Tier II

City

Northern

Ireland

Czech

Republic

Poland South

Africa

Egypt Malaysia Philippines India

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)

“We are willing to pay a

marginal risk premium of

a dollar and few cents in

SA over traditional low-

cost locations...the gap is

not worth risking our UK

customer portfolio”

– Leading UK company

3 Significant cost savings

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)

Direct operating cost per FTE for English contact centre services

2012; UK£ ‘000s per annum per FTE

50-60%

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

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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

3 Significant cost savings

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)

7.5-9.5

12-14

10.5-12.5

14-16

~3.5

SA cost pre

incentive

SA cost post

incentive

Incentive1 Egypt3 India

Fully loaded cost per FTE

2012-13; UK£ ‘000s per annum per FTE

Post incentive 2

“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

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Confidential

Significant Cost Savings

Incentives provide significant financial benefits and

flexibility in usage

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

Structure &

Quantum

Number of

offshore jobs

created each year Incentive 2012/13 2013/14 2014/15 2015/16

Upto 400 Base Incentive1 R40,000 R32,000 R32,000 R24,000

401-800 20% one-off

bonus

Bonus calculated for each job between 401 and

8002

Greater than 800 30% one-off

bonus

Bonus calculated for each job in excess of 8002

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

Disbursement

& use of funds

R 104,000

R 88,000

Eligibility 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

3

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Confidential

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 index1 (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

4 First world experience

1 Lower the rank, lesser is the cost of living. (Rank 1 would be the most expensive city)

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Stable telecom infrastructure with steady addition in

undersea cables and rapidly reducing costs

Improvement in telecom connectivity

“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

5 Robust enabling environment

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

Source: Telcommunication service providers, Africa Undersea Cables research

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BPeSA is developing a Skills Plan with industry

The BPeSA Western Cape’s Board is comprised of representatives from leading global

service providers and Global In-house Centers (GIC) in the province:

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 – Aegis

Nicky Toulouras – Capita

Nazli Laatoe – City of Cape Town

Dermot Grazebrook – IQ Business

Regan Adams – RCS

Approximate Numbers Estimated

Duration

NQF Level Skills Content / Focus

15 2-3 years 8 Executives/Senior Managers

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

10,000

4-6 weeks 5

Functional 2-4 weeks 4

1 week 2,3

10,000

2 weeks 2,3 Soft Skills/Technical Communications

2 weeks 2,3 Work Readiness

2 weeks Top up Menu

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BPeSA Report Findings Overview (May 2013)

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BPeSA Report Findings Overview (May 2013)

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Invest in South Africa – dti video

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