Gauteng carves out a niche in

Gauteng carves out a niche in outsourcing industry with unique incentives (Part I)

We take a closer look at how Gauteng Province’s incentive proposition to business process outsourcers complements national incentives

Gauteng carves out a niche in
An aerial view of The Innovation Hub's main campus - literally across the road from the CSIR's cluster of talent and high-tech infrastructure
An aerial view of The Innovation Hub’s main campus – literally across the road from the CSIR’s cluster of talent and high-tech infrastructure

While each of South Africa’s major cities have quite distinct value propositions to offer the Business Process Outsourcing (BPO) or Business Process Services (BPS) sector, the cities of the Gauteng region have a special advantage in the Gauteng Growth and Development Agency (GGDA, This agency – simply more savvy than most – enjoys a high degree of cooperation with its home province’s leading corporations as well as national government. In South Africa, it can only really be compared to Wesgro, its Western Cape equivalent. While Wesgro has the depth and maturity in its partner network that one would expect of an entity that dates back to 1982, the GGDA – itself a two year-old relaunch of the GEDA (Gauteng Economic Development Agency) – has a certain verve and open-endedness to its thinking that is enviable. It also has scale on its side: compared to Cape Town, with its geographically-enforced compactness, sprawling Gauteng offers more space for large-scale single-campus developments such as The Innovation Hub, Southern Africa’s first real Science and Technology Park (

Far more important than space, though, is the regulatory and fiscal attitude of national and provincial government. At national level, the dti (Department of Trade and Industry) under Rob Davies has aggressively courted what it calls Business Process Outsourcing and Offshoring (BPO&O) since July 2007. Between July 2007 and March 2010, the incentive resulted in the creation of at least 6,000 new jobs and attracted R303 million in direct investment. For the period January 2011-March 2014, however, the incentive was placed under review. BPO&O had, during the 2007-10 period, developed from a minor sector into a robust and mature industry, which required more sensitive management into the future. The detail of South Africa’s policies affecting BPO is particularly important because South Africa, being a considerably more expensive place to do business than traditional offshoring and outsourcing destinations such as India and the Philippines, must compete on quality rather than cost alone. In the industry, South Africa is therefore termed a ‘value-based’ offshore destination, rather than a ‘cost-based’ one (such as India, where cultural and linguistic differences with Europe and North America mean that only 66% of contact centre calls are resolved first-time, versus around 97% for South Africa).

National incentives from the dti

Briefly, the new incentive is a tax exemption paid over three years for each offshore job created and maintained. A bonus incentive is graduated as follows: companies creating between 400 and 800 jobs will recieve a 20% once-off bonus in the year they reach the threshold number of jobs. This rises to 30% for companies generating more than 800 jobs. 

In order to qualify for this incentive, the dti imposes some common-sense conditions. For example, at least one of the parties registered in the scheme must be registered in South Africa; furthermore, the operation should have some heft – it must create at least 50 jobs within the first three years of operation. The incentive does not extend to companies whose arrival is expected to displace existing South African jobs, or companies already benefitting from other major incentive schemes like the Black Business Supplier Development Programme (BBSDP), Cooperatives Incentive Scheme (CIS) or National Industrial Participation Programme (NIPP).

See how Gauteng Province’s own policies and programmes complement the dti’s national incentive in Part II of this article.

See how Gauteng stacks up against South Africa’s other BPO magnet, the Western Cape:

BPO in the Western Cape: how has Government come to the party?

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