South African BPO sector faces U.S. tensions amid growth ambitions
GAUTENG, SOUTH AFRICA — The increasing popularity of the South African outsourcing sector has led to a tremendous growth of United States-linked revenue; yet this sector now faces an essential threat from escalating diplomatic tensions with the United States that could block its participation in the African Growth and Opportunity Act (AGOA).
Amid these tensions, Business Process Enabling South Africa (BPESA) CEO Reshni Singh stated that the sector will need support from the government officials and sector partners to expand its U.S. market operations by 38% this year while hoping to secure foreign investment to create 500,000 jobs by 2030.
U.S.-South Africa relations threaten BPO industry
South Africa’s business process outsourcing (BPO) industry faces an existential threat as deteriorating relations with the United States jeopardize its fastest-growing market, industry leaders warned.
The sector, which has seen U.S. clients grow from 1% to 33% of its business since 2019, now risks losing critical momentum as American lawmakers threaten to revoke South Africa’s preferential trade terms under AGOA. BPESA CEO, Reshni Singh, told the Sunday Times the industry needs urgent government intervention to protect 150,000 existing jobs in 2024 and its ambitious 500,000 job target in 2030.
“We will need senior government officials and politicians to be able to be part of that deal team, to be able to negotiate and to be able to get us to that level of 500,000. I think it’s highly possible,” Singh said, highlighting South Africa’s competitive edge in English proficiency and customer service empathy.
President Cyril Ramaphosa has emphasized that South Africa views the U.S. as a strategic trading partner, but geopolitical tensions continue to threaten this relationship.
Competitive advantages and challenges
Despite these tensions, South Africa maintains competitive advantages in the BPO sector, particularly in servicing U.S. companies, due to strong English language skills and high levels of empathy.
However, competition is intensifying with 13 new major entrants in the BPO sector providing services to banking, financial services, healthcare, and telecommunications industries. South Africa also faces increased competition from countries like India and the Philippines.
The sector’s future growth depends on resolving diplomatic tensions and securing continued access to the U.S. market while leveraging South Africa’s unique strengths in the global outsourcing landscape.
