SA attracts BPO

International companies trying to survive the economic downturn are showing greater interest in developing countries, such as SA, as a destination for business process outsourcing (BPO), according to Accenture.

Mike Ethelston, Accenture BPO head for financial services, says: “BPO provides significant cost reductions, multi-client capability, speed, robustness and expertise. An organisation can focus on its core capabilities and business operations.”

Ethelston says last year, overall spend in BPO went up. He predicts BPO spend will increase this year and bring opportunities for the South African IT industry in the form of business process efficiencies and investment into the country.

The financial, mobile communication and oil industries will particularly be feeling the pain of the economic crisis this year, he says. These sectors will face tough decisions on divesting their businesses and governments globally. In SA, they will look to have a tighter reign over them.

Ethelston points out that, while BPO is expected to increase, one of the major concerns about BPO is job insecurity and that radical change is going to be a big factor this year, with regards to an increase in job cuts. Companies are combining BPO and application outsourcing in their systems. In addition, BPO will not save a company in dire financial trouble.

“BPO is a major decision, however, it is not the silver bullet to save a company and, if anything, it will only add to the complexity if a company is in trouble. BPO involves long-term multi-year contracts in nature and deals with significant transformation of a company's operations model. An organisation shouldn't implement BPO if the organisation is potentially about to fragment as it sells off significant parts of its business.

“Nowadays, given the size and breadth of many organisations, there's no single standard answer, companies need to implement a blended model.”

“With companies having to step up to the plate in bold decisions, because of the impact from the current economic crisis, we are seeing more companies with a national or global footprint turning to countries such as SA and the Philippines for outsourcing. SA potentially represents the balance between a good pricing and a more sophisticated service provision.”

SA is somewhat cushioned from the economic crisis compared to other countries, Ethelston notes. With the 2010 World Cup quickly approaching, this has boosted investment confidence in SA.

“SA will be reasonably protected and will feel some of the effects of the global economy and prices, but they will be protected from the worst of it.”