The diplomatic rift between South Africa and the US not only threatens trade ties but could also undermine jobs in the call centre industry, of the key sectors that service US clients.
Business process outsourcing (BPO) call centres that handle customer care queries from around the world provide thousands of jobs in South Africa. But the falling out with Washington poses a threat.
Reshni Singh, CEO of Business Process Enabling South Africa (BPESA) — the industry association that promotes South Africa as an offshoring destination — told Business Times this week the tensions were cause for concern.
“Obviously, the geopolitical tensions that are here currently between South Africa and the US are high on our list and our focus areas. We have been given a lot of assurance through the Presidency, through BLSA [Business Leadership South Africa], and others around the fact that the diplomatic relations are still there,” Singh said.
“We obviously want to see some action. We want to see that things are going to happen fast because we don’t want it to impact this sector. It is going to be something that we watch very, very closely.”
Singh said in the past two years US clients had surged in importance for the local BPO sector.
“Back in 2019, only 1% of the work that we did was servicing the US market. Today 33% of the work that we do services the US market. We have aspirations to be able to grow that this year to at least 38%.” That kind of increase “is quite significant when you’re talking ... job opportunities”.
BPESA wants to attract increased foreign direct investment and create 500,000 jobs by 2030 — compared with 65,000 jobs in the sector in 2019 and 150,000 last year. Market revenue grew from R18.9bn to R53bn in those five years.
We will need senior government officials, 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 [jobs by 2030]. I think it’s highly possible. However, I think the collaboration and support from our partners to get us there is going to be extremely critical
Singh said there had been 13 new major entrants in the BPO sector in South Africa “recently”, providing customer care in banking, financial services, health care, retail, telecommunications and other areas.
“We will need senior government officials, 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. However, I think the collaboration and support from our partners to get us there is going to be extremely critical. And if that fails, for whatever reason, then this target is not going to be met.”
She said South Africa was a good customer-service fit for US companies because BPO staff had good English and strong empathy. However, the sector could face stiff competition from rivals in such countries as India and the Philippines.
President Cyril Ramaphosa said in parliament this month that the US was a strategic, historic partner. Referring to the African Growth and Opportunity Act (Agoa), which exempts many imports into the US from tariffs, he said: “Participation in Agoa is not at our behest. It is at the behest of the US and what we seek to do, and have done for many years, is to demonstrate that we are a good trading partner to the US, and indeed to many countries around the world.”
Ramaphosa told parliament that at the Agoa forum last year, African countries had demonstrated to the US that it too benefited from the trade agreement.
“We export, but we also import from the US. So it is a two-way process, as it is with many countries around the world. As it is now, we continue, not only in anticipation of an Agoa initiative, but we continue to expand our export market for a variety of goods around the world,” the president said.
Speaking at a University of Johannesburg ceremony where he received his honorary doctorate this week, former president Kgalema Motlanthe urged the South African government to mend ties with the US and strengthen its links with trade partners such as the EU.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.