Evaluation of the Monyetla Work Readiness ... - Business Trust

1 BACKGROUND TO THE CASE STUDY1.1 Introduction and ContextThe industry-defining McKinsey Report (2004) on the Business Process Outsourcing and Off shoring(BPO&O) sector supplemented by studies by Deloitte and Letsema Blueshift Consulting concludedthat the South African BPO&O and Contact Centre (CC) industry has the potential to grow, delivera significant contribution to gross domestic product (GDP) and to generate a significant number ofjobs in a country that has a high rate of unemployment.Other research commissioned by the Department of Trade and Industry (DTI) and the BusinessTrust has also established that “South Africa is ideally placed to take advantage of an opportunitythat will, if appropriately managed, contribute significantly to the social and economic developmentof the Southern African region and the continent” (Business Trust, 2006) 1 . Since 2002, the domesticindustry has grown by an average of 8% per annum, and now employs approximately 80,000 people.Already the effects of the growth in the BPO&O sector are discernible at provincial and localeconomic level (Deloitte, unpublished research for the Business Trust, 2006). The McKinsey Reportestimates that by 2009, the BPO&O sector in South Africa could be worth $800 million, createbetween 65,000 and 100,000 jobs and attract between $90 million and $175 million in foreign directinvestment (FDI).Established BPO&O locations such as India, China, Ireland and the Philippines currently dominate thesector but, according to the McKinsey Report, they are not expected to be able to meet thegrowing skills and infrastructure demands in the near future. These unmet demands will offerexciting opportunities for South Africa to become a significant player in this sector.1.2 Opportunities in the South African BPO&O SectorResearch conducted for the BPO&O Sector Support Programme by McKinsey & Associates during2005/06 suggests that a concerted and focused national intervention would accelerate growth of thesector, and expand employment.While the BPO&O sector currently contributes almost 0.92% of GDP, the McKinsey researchsuggests that effective international marketing of South Africa as a BPO&O destination, attractiveincentives and focused talent development could lead to the creation of an additional 25,000 directjobs and 75,000 indirect jobs resulting in an additional GDP contribution of 0.5% (McKinsey &Associates, unpublished research, 2006).The growth of the BPO&O sector in South Africa would result in other positive spinoffs including:• Social benefits: improved quality of life as a result of development and job creation within thelocal economy;• Knowledge enhancement: as a result of the increase in the pool of skilled labour and thecapacity of public and private training providers to service the industry;• Building the South Africa brand: by promoting the country as a leading player in the knowledgeeconomy; and• Improving infrastructure: in information technology and related services and utilities.Various studies confirm that South Africa is emerging as a great contender for Tier 2 offshoredestination services (Africa Analysis Team, 2005). The Africa Analysis Team study also reports thatfor security reasons most multi-national companies do not want to put all their offshore business inone country and that as a result, South Africa is attracting more business for Tier 2 operations.1 From an unpublished Business Trust Document: “Requirements of a Sustainable Talent Development Model for theBPO&O Sector”, June 2006.10