Cape Town aims to rival India in global BPO market
CAPE TOWN, SOUTH AFRICA — South Africa’s second-largest city is aiming to stake its claim in the global business process outsourcing (BPO) industry, long dominated by India.
According to a report from Moneyweb, officials in Cape Town are pushing to establish high-value outsourcing hubs, known as global capability centers (GCCs), to attract multinational companies looking to diversify operations after the pandemic.
Cape Town’s bid for high-end outsourcing
CapeBPO, a local industry lobby group funded by the city administration, plans to present a proposal to the municipal cabinet within two months, outlining a strategy to emulate India’s outsourcing success.
The city hopes to lure companies currently concentrated in India, home to over 1,700 GCCs, including those run by Goldman Sachs, Rolls-Royce Holdings, and Victoria’s Secret & Co.
“We now are presented with an opportunity to transition some of that volume and services from Bangalore to Cape Town,” said Clayton Williams, chief executive officer of CapeBPO.
“What’s in it for India? The reality is they’re saturated, they’re concentrated and to represent a more long-term strategy, they need trade partners across the world that can help deliver services,” Williams added.
The local industry already employs more than 95,500 people in the Western Cape, nearly 70% of whom serve clients in the United States and United Kingdom, CapeBPO reported. The sector generates annual foreign direct investment exceeding R24 billion, rivaling the region’s tourism industry.
Leveraging talent, timezones, and incentives
South Africa hopes to attract global investors with its favorable time zone, English-language proficiency, modern infrastructure, and government incentives.
Officials also plan to develop sprawling tech parks modeled on India’s Bengaluru hubs, situated on the periphery of the metro area, home to 4.8 million people, to bring jobs closer to residents.
“It requires some systemic changes,” said Mohith Mohan, CEO of Bengaluru-based MOAR Advisory, hired to assist with CapeBPO’s feasibility study.
“Whether it’s with regard to education, government policies, infrastructure, those have to be enacted for the project to be a success,” Mohan added.
Cape Town has already seen some BPO jobs shift from India and the Philippines as companies seek to spread their operations geographically, a trend accelerated by the coronavirus pandemic.
Outlook for Cape Town’s BPO ambitions
If successful, Cape Town could position itself as a credible alternative to India in the US$413 billion global outsourcing market projected by 2030.
While the city faces challenges in scaling operations and cost competitiveness, its combination of skilled talent, strategic location, and government support may make it an attractive hub for multinational firms.
“If in five years’ time we haven’t built a global capability centre [center] referenceable capability with some form of scale, we would have failed,” Williams noted.
