Making Way For Addressing Skills Shortage — A Catalyst For Higher Job Creation Within South Africa

The Business Process Outsourcing (BPO) industry in South Africa has already become a key employment generator. While progress has been made, solutions that will address the disparities between Business Process Outsourcing (BPO) and job creation need to be focused on with greater urgency.

Automation of business processes is one such approach that can offer cost-effective, efficient solutions based on best practices, and appropriate governance structures.

There is always a question in the public domain whether outsourcing creates jobs or destroys them. A simplistic perspective will look at outsourcing in isolation and call the movement of jobs from a company to a local outsourcing provider as a loss of jobs. To say a country that allows companies to outsource to obtain efficiencies and cost reduction causes job losses is uninformed. For many companies to survive and continue to employ some people, they need to drive efficiencies and continuously improve their manual ways of doing business.

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Driving efficiencies could result in job losses, whether improvements are done internally or by an outsourcing provider. Statistically, there are more employees that get retrenched annually because of company failures (mainly where the revenues cannot cover the overheads of that company), than job losses caused by efficiencies through outsourcing.

The question we should be asking is whether it is better to retain 100% of a company’s employees for a short while than to lose 15% of employees to keep on the rest through to retirement.

A solution to this quandary lies in the notion that a country that can import foreign jobs also creates new jobs. Successful outsourcing countries have a vibrant domestic outsourcing market that creates talented outsourcing professionals who become attractive globally.

The gap currently exists in professionalising the outsourcing services. Deloitte is working in this space and has collaborated with government on the Monyetla Work Readiness Programme and Sector Education and Training Programmes. These have established over 222,500 jobs to date, 32,500 of which serve the international market within outsourcing opportunities.

Forward-looking business leaders are already planning for the ambitious goal of building on South Africa’s strength in voice processing and developing skills in non-voice processing functions, particularly in legal process outsourcing and knowledge process outsourcing.

The Economic Performance Indicator for Cape Town (EPIC) report suggests that the business process services (BPS) industry – which encompasses customer contact centres – currently contributes R50 billion to South Africa’s gross domestic product (GDP).

This demands a continuous supply of a talented, work-ready pool of workforce to carry on drawing foreign investment into South Africa as the industry readies itself to continue producing skilled human capital.

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Employment through Impact Sourcing

When it comes to leveraging BPO, companies should connect high-potential, disadvantaged youth to available jobs. The government has taken several steps to promote impact sourcing.

This was initiated in 2008 with a programme to train unemployed high school graduates for the BPO industry, and has made efforts to incentivise top BPO providers to start operations in the country.

This programme has been beneficial particularly to those previously disadvantaged youth whom have received their first job opportunities even without prior work experience. The benefit of collaborating with government organisations such as the Finance and Accounting Services Sector Education and Training Authority (FASSET), has shown the industry how Deloitte is using impact sourcing to create more (entry-level accounting and IT operations) jobs for the underprivileged within South Africa.

Revealing the reality of outsourcing

In today’s world, outsourcing is just one measure that could curb unemployment within South Africa. Apart from the skills development, the country has supplementary national initiatives in place to hasten skills development, such as the National Skills Development Strategy (NSDS) and the Joint Initiative on Priority Skills Acquisition (JIPSA). However, (BPO) industry experts believe that more is required.

South Africa has one of the most inclusive national skills development systems across the world; that said, the schooling system needs to be revaluated and unemployment and skills gaps to be addressed in order to improve its stature as a competitive business process outsourcing destination.

The success of BPO however, is dependent on numerous factors including the implementation of political will, and the willingness of all the players to adopt the processes as a positive step.

All participants (government, BPESA and incumbent players) need to work in tandem to reduce or eliminate the skills gap to improve South Africa’s image as a BPO destination of choice.