kulkarni careport 101609

7/25/2019 Kulkarni CAReport 101609

1/16

1

COUNTRY ANALYSIS REPORT

South Africa as a BPO*destination

Student: Anand Kulkarni

Course : D-503 (Internatinal !u"ine"" En#irn$ent%

Taught by Pr&e""r R'ert P )ar*ia

I have neither given nor received unauthorized aid on this deliverable.

NOTE: BPO stands for Business Process Outsourcing


2/16

2

Ta'le & Cntent"

1 Introduction! " !

2 #enera$ En%iron&ent ' Industry I&(act! ) !

21 Cu$tura$ factors! ) !

211 Cu$tura$ Pro*i&ity to the +nited States and the +nited ,ingdo&! ) !

212 -inguistic f$e*ibi$ity! ) !

21. Cu$tura$ ties /ith India 0 co&&on co$onier! ) !

22 d&inistrati%e and Po$itica$ factors! 3 !

221 Co&&on Po$ity! 3 !

222 South frican #o%ern&ent incenti%es and &oti%es! 3 !

22. Confidentia$ity of infor&ation! 3 !

2. #eogra(hic factors! 3 !

2.1 Ti&e one differences! 3 !

2.2 Near!shore sca$ab$e destination for sub!Saharan frica! 3 !

2" Econo&ic factors! 4 !

2"1 /e$$ run econo&y! 4 !

2"2 T/o tiered econo&ic structure! 4 !

2". 5oreign In%est&ent! 4 !

2"" 5oreign trade! 6 !2") Better 7ua$ity at $o/er cost re$ati%e$y s(ea8ing! 6 !

2) Socia$ factors! 6 !

2)1 Education!a%ai$abi$ity of sca$ab$e9 high 7ua$ity Eng$ish s8i$$s! 6 !

2)2 S8i$$s E&igration! !

2). Cri&e! !

2)" Socia$ unrest &ay rise! !

23 Techno$ogy and infrastructure! !

231 Connecti%ity! !

232 Po/er! 1; !

23. Te$eco&s! 1; !

23" 2;1; 5I5


3/16

.

" Conc$usion! 11 !

"1 =eco&&endation! 11 !

"2 Ty(e of business %enture! 11 !

". Stand of South frican go%ern&ent! 11 !

) E*hibits! 12 !

3 =eferences! 1) !


4/16

"

T+ !e,nd!rder" India Ltd

r$+ Anand Kulkarni. Internatinal !u"ine"" De#el/$ent )ru/

Su'e*t+ rei1n Dire*t In#e"t$ent Re*$$endatin

2 Intrdu*tin

BeyondBorders9 a strong BPO ($ayer fro& India9 has engaged the ser%ices of IB>#

?Internationa$ Business >e%e$o(&ent #rou(@ to e*($ore the =e(ub$ic of South frica as a

destination of choice to enter the business (rocess outsourcing &ar8et BeyondBorders has a

successfu$ trac8 record in the BPO industry in India and /ou$d no/ $i8e to e*(and beyond India

The 8ey considerations ha%e been a$ong the fo$$o/ing three di&ensions:

a The genera$ business en%iron&ent (re%ai$ing in South frica and its i&(act on (otentia$

business o((ortunities

b S(ecific conditions /ithin the business en%iron&ent in South frica that are of s(ecia$

significance to the BPO industry fro& the (ers(ecti%e of BeyondBorders 5or e*a&($e:

the ti&e that it ta8es to setu( a BPO faci$ity1in South frica9 the a%ai$abi$ity of s8i$$ed

$abor9 etcc S(ecific conditions /ithin the business en%iron&ent in South frica that are of s(ecia$

significance to the (otentia$ future c$ients of the en%isaged BPO center 5or e*a&($e:

Cu$tura$ differences and si&i$arities9 $anguage barriers9 etc

These three di&ensions ha%e NOTbeen se(arate$y de$ineated to a%oid a contri%ed or forced

ana$ysis since &any issues are uni%ersa$ and not necessari$y s(ecific to any (arty Instead9 the

conte*t of the discussion /ou$d c$ear$y indicate the issue at hand

t this stage9 this is sti$$ a &ar8et entry decision9 $eading to a focus on the big (icture and higher

$e%e$ issues /ithout de$%ing too &uch into the detai$s O%era$$9 an extendedCA! fra"e#or$

has been e&($oyed to con%enient$y categorie the %arious issues thus enab$ing better decision

&a8ing

1 BPO faci$ity &ight ty(ica$$y consist of a ca$$ center /ith the re7uired te$eco&&unication

infrastructure housed in a bui$ding containing a certain nu&ber of seats that corres(onds to the

nu&ber of e&($oyees a%ai$ab$e to hand$e custo&er ca$$s at any gi%en ti&e


5/16

)

)eneral En#irn$ent 4 Indu"tr, I$/a*t

2 Cultural &a*tr"

22 Cultural Pri$it, t t6e United State" and t6e United Kin1d$

South frica is cu$tura$$y c$oser to the +nited States and +nited ,ingdo& that is IndiaConnecti%ity to the &aAor hubs of acti%ity9 Ca(e To/n and ohannesburg is e*ce$$ent9 /ith );

f$ights fro& each $ocation to both the +, and the +S There is 7ua$ity infrastructure9 in ter&s

of (ro(erty9 te$eco&s9 (o/er and uti$ities around &ain hubs The $ifesty$e afforded by the country

genera$$y a((ea$s to e*(atriate e&($oyees9 enab$ing co&(anies to attract &anageria$ ta$ent to

assist in set u( of o(erations and (artnershi(s ?1@ South frica a$so enAoys the ad%antage of

ha%ing strong (roduct affinity /ith


6/16

3

Ad$ini"trati#e and Pliti*al &a*tr"

2 C$$n Plit,

The Econo&ist Inte$$igence +nitDs 2;;4 de&ocracy inde* ran8s South frica .1st out of 134

countries9 (utting it a&ong the )" countries considered Ff$a/ed de&ocraciesF $though South

frica narro/$y &issed the c$assification of a Ffu$$ de&ocracyFG it scored reasonab$y /e$$ acrossa$$ the categories I&(ortant$y9 South frica has he$d a series of co&(etiti%e e$ections starting in

1"9 /hich ha%e been undis(uted$y free and fair9 and the institutions of de&ocracy are certain$y

not in doubt In addition9 South frica is characteried by gro/ing state ca(acity9 /hich is %ita$

for the (rotection of ci%i$ $iberties9 as /e$$ as reasonab$y effecti%e $eadershi( and good $e%e$s of

(ub$ic (artici(ation in e$ections o/e%er9 the $ong!ter& de%e$o(&ent of de&ocracy in South

frica &ay be under threat: the (rob$e& $ies /ith the fact that9 because no (arty has been ab$e to

cha$$enge the hege&ony of the ru$ing frican Nationa$ Congress9 it is beco&ing a de facto one!

(arty state The de%e$o(&ent of a &aAor o((osition (arty is crucia$ to the de%e$o(&ent of fu$$

de&ocracy ?1@

$$ in a$$9 the (o$itica$ en%iron&ent is at $east as conduci%e to business as in India9 if not &ore so

Sut6 A&ri*an )#ern$ent in*enti#e" and $ti#e"

South frica is $oo8ing to/ard the business (rocess outsourcing sector to he$( dri%e econo&ic

gro/th9 and is offering (otentia$ in%estors incenti%es in the for& of start!u( and e*(ansion grants

and de%e$o(&enta$ (ricing for te$eco&&unication The incenti%e co&(rises a grant to/ards

a((ro%ed 7ua$ifying e*(enditure for start!u(s and e*(anding BPO o(eration9 ai&ed (ri&ari$y at

ser%ing offshore c$ients

BPO is considered a 8ey sector under the cce$erated and Shared #ro/th Initiati%e for Southfrica ?sgi!S@9 /hich see8s to achie%e an annua$ econo&ic gro/th rate of 3H bet/een 2;1;

and 2;1"9 in order to ha$%e (o%erty and une&($oy&ent by 2;1"

Thus the #o%ern&ent has ta8en a (ro!business stance and is $i8e$y to foster a su((orti%e

en%iron&ent and not raise barriers to entry There is c$ear$y a /in!/in situation here for the

foreign o/ners and the $oca$ (o(u$ace

3 Cn&identialit, & in&r$atin

$though no for&a$ data (ri%acy $egis$ation is yet in ($ace9 co&($iance /ith internationa$ data

(ri%acy regu$ations is co&&on($ace ?1@


7/16

4

3 )e1ra/6i* &a*tr"

32 Ti$e 9ne di&&eren*e"

In India and in the Phi$$i(ines ?/hich are a$ready &aAor (artici(ants in business (rocess

outsourcing@ often ti&es BPO e&($oyees ha%e to /or8 at night shifts9 and ha%e to be

a((ro(riate$y co&(ensated ?abo%e nor&a$@ for the odd /or8 hours

South frica shares the sa&e ti&e one as &uch of Euro(e9 enab$ing &any co&(anies to a%oid

(aying a (re&iu& for out of hours /or8ing to ser%ice their ho&e &ar8ets

3 Near-"6re "*ala'le de"tinatin &r "u'-Sa6aran A&ri*a

South frican 5inancia$ Ser%ices &aAors are e*(anding o(erations ra(id$y into sub! Saharan

frica This (resents o((ortunities for ser%ice (ro%iders to use South frica as a base to ser%e the

sub!Saharan frica o(erations of do&estic &aAors $though costs in South frica are higher

re$ati%e to other $ocations in the region ?eg ,enya9 Nigeria@9 South frica is /e$$ (ositioned to

ser%e as a near!shore sca$ab$e destination gi%en its $arger ta$ent (oo$9 &ore e%o$%ed BPO industryand better 7ua$ity infrastructure ?.@

: E*n$i* &a*tr"

:2 A 7ell run e*n$,

Stabi$iing the state finances has been a (o$icy (riority for frican Nationa$ Congress ?NC@

go%ern&ents The (ursuit of a conser%ati%e fisca$ (o$icy has he$(ed to bring do/n the budget

deficit dra&atica$$y budget sur($uses /ere recorded fro& 2;;3;4Fand to reduce go%ern&entdebt to (ro%ide a sustainab$e ($atfor& for de%e$o(&ent e*(enditure =e%enue co$$ection has

consistent$y out(erfor&ed targets o/ing to the successfu$ restructuring of the South frican

=e%enue Ser%ice and an e*(anded ta* base s a resu$t9 South frica has been a/arded

Fin%est&ent gradeF ratings fro& the internationa$ credit!rating agencies fter an i&(ressi%e

se%en years of conso$idating (ub$ic finances and fisca$ constraint9 the go%ern&entDs fisca$ (o$icy

began to shift in fisca$ year 2;;1;2 ?(ri$!Jarch@ to a &oderate$y e*(ansionary stance in order

to address socio!econo&ic cha$$enges and infrastructure bac8$ogs

: T7 tiered e*n$i* "tru*ture

South frica has a t/o!tiered econo&yG one ri%a$ing de%e$o(ed countries and the other /ith on$ythe &ost basic infrastructure It therefore is a (roducti%e and industria$ied econo&y that e*hibits

&any characteristics associated /ith de%e$o(ing countries9 inc$uding a di%ision of $abor bet/een

for&a$ and infor&a$ sectors9 and une%en distribution of /ea$th and inco&e The for&a$ sector9

based on &ining9 &anufacturing9 ser%ices9 and agricu$ture9 is /e$$ de%e$o(ed ?1@


8/16

6

This a$$o/s the co!e*istence of e*ce$$ent infrastructure a$ongside a $abor (oo$ /ith &atched

s8i$$s /hich are re$e%ant to the BPO industry

:3 rei1n In#e"t$ent

South frica offers foreign co&(anies a (ro&ising but so&e/hat difficu$t o(erating

en%iron&ent The country has &ar8et!deter&ined interest rates and a free!f$oating currency9 butthese re&ain high$y %o$ati$e The centra$ ban8 has shifted its &onetary focus to targeting inf$ation

and has resisted inter%ening in foreign!e*change &ar8ets in recent years The go%ern&ent has

gradua$$y re$a*ed e*change contro$s9 and it /e$co&es foreign in%est&entKboth direct$y and

through the securities &ar8ets Syste&s of ta*ation and cor(orate disc$osure ha%e i&(ro%ed and

no/ a((roach the nor&s of &ore de%e$o(ed econo&ies The &ost recent e*a&($e of this is the

(hasing out of the Secondary Ta* on Co&(anies /ith the shareho$derDs di%idend ta* in 2;;4Kto

a$ign South frica /ith internationa$ (ractice The country has enAoyed success in attracting both

direct and (ortfo$io in%est&ent9 though the f$o/ of funds re&ains sensiti%e to changes in

senti&ent a&ong internationa$ in%estors ?2@

This augurs a genera$$y fa%orab$e c$i&ate for foreign in%est&ent

:: rei1n trade

South frica has a re$ati%e$y o(en econo&y9 /ith foreign trade ?i&(orts and e*(orts@ accounting

for 331H of #>P in 2;;4 and an esti&ated 4)6H in 2;;69 according to the Econo&ist

Inte$$igence +nit The &ain destinations of South fricaDs e*(orts in 2;;6 /ere the +nited States

?121H@9 #er&any ?"H@9 a(an ?1H@ and the +, ?42H@G the &ain origins of i&(orts /ere

#er&any ?12.H@9 China ?1;6H@9 the +nited States ?62H@ and Saudi rabia ?33H@

This /ou$d &ean that South frica is a 8no/n entity as far as foreign trade is concernedJoreo%er9 &any of the trading (artners /ou$d be (otentia$ targets for business (rocess

outsourcing o((ortunities and because of their trade contacts /ou$d be &ore o(en to outsourcing

their business (rocesses to South frica based %endors ?3@

:5 !etter ;ualit, at l7er *"t relati#el, "/eakin1

Current arbitrage (otentia$ fro& South frica re$ati%e to /estern &ar8ets ?eg +S9 +,@ is 7uite

significant9 /ith a sa%ings (otentia$ of L);!3; (ercent on an o(erating cost basis


9/16

5 S*ial &a*tr"

52 Edu*atin-a#aila'ilit, & "*ala'le. 6i16 ;ualit, En1li"6 "kill"

+nder a(artheid.9racia$$y biased education (o$icies under&ined the s8i$$s resources of the

country9 /ith $ong!ter& i&($ications for the $abor &ar8et and South fricaDs co&(etiti%eness

o/e%er9 education $e%e$s increased dra&atica$$y /ith the transition to de&ocracy as &oreschoo$s /ere bui$t and schoo$ attendance /as &ade co&(u$sory The 2;;1 (o(u$ation census (ut

adu$t $iteracy rates at 62"HG youth $iteracy ?1)!2"!year!o$ds@ is higher at "H ccording to the

13 (o(u$ation census9 1.H of South fricans had no schoo$ingG this i&(ro%ed to 14H of

the tota$ (o(u$ation by 2;;1 and 1;.H in 2;;4 ?.@

O%er .;;9;;; schoo$ $ea%ers and 1;;9;;; #raduates enter the $abor (oo$ each year

e(art&ent of -abor re$eased in une 2;;69 cites a sa&($e sur%ey of the s8i$$ed (o(u$ation9 in

/hich as &any as 3H of res(ondents ad&itted to ha%ing gi%en so&e thought to $ea%ing South

frica (er&anent$y tota$ of )6H e*(ressed a desire to $ea%e and "H said it /as $i8e$y or %ery$i8e$y that they /ou$d do so at so&e (oint $though on$y 4H said that it /as $i8e$y that they

/ou$d $ea%e /ithin si* &onths9 2)H said they /ou$d do so /ithin t/o years9 and "2H /ithin

fi%e years Jost affected /as the high!techno$ogy sector ?..H@9 fo$$o/ed by &anufacturing

?11H@9 education and hea$th ?1;H@9 and business ser%ices ?H@ ?"@

53 Cri$e

Cri&e continues to be a concern in South frica and co&(anies ha%e to use access contro$9

guards on (re&ises and security ca&eras Co&(anies screen recruits for cri&ina$ records and

ha%e stringent (rocedures in ($ace Jany &onitor ca$$s in the ca$$ centre $$ of this $eads to

additiona$ financia$ burden for doing business

5: S*ial unre"t $a, ri"e

The &ain ris8 to &ediu&!ter& stabi$ity in South frica is the threat of %io$ence (osed by

disgrunt$ed shanty!to/n d/e$$ers and other disaffected grou(s angry about Aob $osses9 inco&e

. A/art6eidis a socia$ (o$icy or racia$ segregation in%o$%ing (o$itica$ and econo&ic and $ega$

discri&ination against (eo($e /ho are not


10/16

1;

ine7ua$ity and (oor ser%ice de$i%ery series of (rotests and stri8es in &id!2;; high$ighted the

(rob$e&9 a$though the unrest /as of a $o/er intensity than the *eno(hobic attac8s on frican

foreigners that too8 ($ace a year ear$ier: these /ere short!$i%ed but e*(osed fai$ure of (o$icies

to/ards Mi&bab/e ?the source of .& refugees@9 to/ards &igrants ?/ho are gi%en fe/ rights@ and

to/ards the $oca$ (oor ?/ho often $ac8 basic a&enities@ fai$ure to tac8$e these under$ying

(rob$e&s ris8s a re(eat or9 /orse9 the e&ergence of inter!ethnic and inter!racia$ %io$ence bet/een

South fricans


11/16

11


12/16

12

: Cn*lu"in

:2 Re*$$endatinO%era$$9 South frica see&s to be a (ro&ising destination for setting u( offshore BPO ser%ices


13/16

1.

5 E6i'it"

E6i'it 2 +Detailed map of South Africa

Source: Econo&ist Inte$$igence unit

E6i'it + Clean Map of South Africa


14/16

1"

Source:www.southafricanbedandbreakfast.info/(9)

E6i'it 3 +Map of South Africa indicating 9 provinces and countrys location in Africa

Source:


15/16

1)

Source+ Econo&ist Inte$$igence +nit

E6i'it 5 + Co&(arison of sa%ings ga( bet/een South frica and India

Source+ =eady to co&(ete9 (:%


16/16

13

< Re&eren*e"

1 Sta'ler. Bill,no/$edge rtic$es

kulkarni careport 101609

Documents