Many believe that BPO is currently the fastest growing segment in the outsourcing market. This could be true in the rest of the world, but, according to Gartner analyst, Johan Jacobs, South African uptake is slow.

Says Jacobs: ?BPO is vendor hype, and not at all end-user-driven at the moment. Vendors are currently pushing BPO locally, but end-users are still sceptical, and not at all ready to take up the challenge of outsourcing critical business processes as yet.?

A survey by Gartner of 200 local ICT companies, says Jacobs, revealed that only 6 percent of the respondents are currently interested in BPO, or will be within the next two to five years.

The key reason that local companies are not interested in BPO, says Jacobs, is: ?Because they do not feel comfortable giving external access to their back-end business processes. They see their business processes as their competitive advantage over technology. Everybody can buy the technology today. It is the processes that are becoming the competitive differentiator.?

Not a new phenomenon

BPO is not a new phenomenon, and, for a while, was a factor within the U.S. The trend is, however, taking off in Europe, and, in so doing, will bring SA, as a BPO and outsource destination, to the fore.

BPO is perceived to be a next big boom in the evolution of outsourcing, and even President Mbeki, in his state of the nation address, noted that outsourced call centers and business process outsourcing will be added to a list of growth sectors on which government will focus.

The Department of Trade and Industry has also indicated that it wants this country to become an important player in back-office processing, software application development, architectural design, project management and engineering consulting. But is it taking off?

Despite government noticing the many opportunities that outsourcing and BPO can offer, Paul Fick, MD of Spescom DataFusion, says government needs to do more. ?A big obstacle is government. Even where incentives are in place, such as with training, companies still battle to get refunds for the training,? Fick notes. He adds that government involvement and better marketing of SA as a BPO destination will be key to success.

Mteto Nyati, IBM Global Services Executive in SA, believes that it is the responsibility of the private sector and individual companies to market themselves and SA as a BPO destination. ?Government can create opportunities, but companies must market what it is they can offer and should not try to abdicate their responsibilities.?

Skills and cost

Industry players are mostly confident that SA has the necessary skills to become a major contender within the BPO space. India and China are favored as outsourced call center destinations because of low costs.

Says Fick: ?They have the volumes of people to man call centers, but they do not have the specialized skills, like this country, to address needs within the more complex BPO arena.? Fick adds, ?Yes, SA is still more expensive in terms of labor, but telecoms costs have fallen dramatically, and will drop further with the deregulation of the telecoms industry.?

Karel Botha, Western Cape regional manager for Spescom DataFusion, says that SA?s ability to add additional value to a specific transaction, as well as access to multi-skilling, is what sets the country apart as a better BPO destination.

T-Systems? Head of Business Development for IT operations, George Cilliers, agrees that SA?s scalability of resources is making the country a great contender, and he believes that complex voice services is where SA is going to take the lead as an outsourcing and BPO destination over India and China. In terms of costs he adds: ?T-Systems? entire application monitoring is being done from SA, because we found that the local people cost is cheaper than with our German counterparts.?

According to Nyati, high telecoms cost is just a part of the whole BPO debate, and one should look at all the factors that have an impact on choosing an offshore destination, like skills. ?There are still a lot of companies worldwide that need mainframe and Unix services, and India and China missed these opportunities by moving on to Windows-focused services. We still teach mainframe and Unix to students at technikons and universities, and therefore have those specialized skills.?

In contrast, Mike Renzon, MD of Intelleca, believes that it will be very difficult for SA companies to attract new business in the BPO space. He says that there is a possibility for success and sustainability for companies in industries already active locally, like health care. ?For new start-ups, looking at learning new processes it will be very difficult,? he notes.

Cilliers believes that there is only a small window of opportunity for SA companies to enter the BPO market. ?Those not doing something within the next two to five years will miss the boat,? he says.

Jacobs notes that the real developments are in the business process consultancy space, and not BPO. ?Companies are currently doing a whole lot of business process re-engineering internally, and are getting consultants in to help them achieve this. Consultancy is where the business is right now,? he adds.

The conclusion is: SA has the skills, and there are opportunities for growth. What companies do to play in the BPO space lies within themselves, and how fast decisions are going to be made to grab these opportunities, or how fast end-users decide to adopt BPO and let go of certain non-core processes.