My Industry Sector: Guns or jobs? Mitchells Plain could be a BPO global hub if it keeps crime at bay

So says Clayton Williams, chief executive of CapeBPO, the strategic industry body for Business Process Outsourcing in Cape Town and the Western Cape.  

CAPE CHAMBER: The "Township" Advantage: With the recent launch of the Beacon Valley BPO facility and the target of 20,000 seats across the Cape Flats by 2035, how does Mitchells Plain specifically differentiate itself from traditional hubs like the CBD or Century City for a prospective investor?

CLAYTON: The primary attraction for operators would be the close proximity to where people live. If we look at demographic profile of the staff who work in the industry, about 85 percent live on Cape Flats, and the biggest population is in Mitchells Plain – about 16.3% live in Mitchells Plain. So the big attraction for operators would be locating their operations close to where a big portion of their staff live.

The second largest precinct is Khayelitsha. With cost incentives, reduction of cost and transport is a big attraction. Operators for night-based transport offer transport to people’s doors. North of 30% of people cost is transport. Obviously, that would be mitigated or circumvented if the business was located closer to where people live.

From a business continuity perspective, if operators are closer to where people live then, for instance if there are taxi strikes, people could still easily come in to work.
 

CAPE CHAMBER: Scalability: Beyond entry-level voice services (call centres), what is the potential for Mitchells Plain to host higher-value BPO functions like Legal Process Outsourcing (LPO), Fintech support, or AI data labeling?

CLAYTON Typically, the vast majority of opportunities would be reflective or representative of the overall market. Overall delivery market is primarily voice-based customer experience with, admittedly, varying degrees of complexity -- not just your basic rudimentary commoditised services. We’ve seen an overall evolution of BPO services that are highly tech enabled, even though they may be voice delivered.  

The reality is that most services are now multi-channel with tech augmentation. The tech in most cases has become mainstream, and AI is now used to augment delivery in terms of efficiency and speed – already that tech is entrenched. The vast majority of operations delivered out of Mitchells Plain will probably be reflective of the industry. But as we evolve our value proposition, we are definitely starting to see interest and referenceable capability in back office and shared services. That could be a reality in terms  of delivery out of Mitchell’s Plain. But safety and security concerns need to be satisfied, as well as infrastructure issues. It needs to be seen as an aspirational delivery location. Especially with shared services and back office services we’re looking at a different profile of staff member. 

Would a chartered accounted delivering high-end financial series for an organisation want to be based in Mitchells Plain, or not? 

That  is the question. As we evolve the value proposition and the optics of the precinct, and the delivery out of precinct, it could definitely include your higher value chain services. But i do think there's a lot of work to be done around making the precinct for staff to work out of, especially those professional staff that maybe live in areas outside of Mitchells Plain
 

CAPE CHAMBER: The "Lead Firm" Effect: How can existing "lead firms" in the Mitchells Plain precinct act as anchors to attract smaller tech start-ups and support services, creating a self-sustaining ecosystem rather than just isolated hubs?

CLAYTON: Yes, as the ecosystem develops and matures, within Mitchells Plain you will definitely see smaller incubator and support services supporting that ecosystem. Even something as simple as informal traders; staff that work there will need access to food, and we’ve definitely seen that in other areas with dense concentration of operators and operations. We’ve seen the emergence of an informal trading ecosystem and economy and I don't think this would be any different. 

As long as the optics of the precinct are attractive, I don't see why more established blue chip brands won't consider domiciling there. The look of buildings, the aesthetics – it will probably come with the development of that precinct as a delivery location. It definitely won’t be a drop-and-go call scene strategy. 

If we want scale, the intention is to build out and support the development of an ecosystem  which is a lot broader than your commodity sweatshop-type environment. The strategy is that it is a delivery location as good aesthetically as the CBD, and with a significant investment appetite from private sector in support of that.

It will take a strong and very conscious public and private sector partnership to ensure that this happens. In our conversation with operators that that have expressed interest, or that have committed, the key conversion point in satisfying approvals and strategy execution is mitigating safety and security concerns. Things like visible policing, ensuring staff are safe, and transport. Transport  is a big one because our industry is affected heavily by hijackings and extortion. 

One would have to address all those concerns because no bus will invest if it is deemed unsafe. So it’s is definitely a matter of working with government on a safety and security strategy. These are big multinationals that have global risk registers and follow certain protocols, with long due diligence processes  before agreeing to set up. The role of government is therefore critical in working together with the private sector to satisfy concerns as a collective.
 

CAPE CHAMBER: Current government incentives (like the GBS Grant) are highly effective. However, what non-financial incentives (e.g., expedited land-use rights for BPO parks or "Digital Nomad" style infrastructure) could local government implement to fast-track investment?

CLAYTON: The DTIC incentive grant has been critical for the industry in terms of facilitating growth. Organisations benefit commercially from that incentive, and and are incentivised to continue to create jobs. But the reality is, and it’s a big challenge that the industry faces, that under the current strained fiscal environment the longevity of the system is under question. It is well known within industry that access to that grant is becoming limited, and the potential is getting smaller. We need to look at other ways to reduce costs, whether rebate or tax rebate or any creative ways. 

At the moment the reality is that South Africa – and the Western Cape and Cape Town in particular, is in a very price sensitive situation relative to competitor locations like, for instance, the Philippines. The last time I looked I saw it is anywhere from 20 to 40 % more expensive here compared to the Philippines And then there’s the emergence of other delivery locations in Africa – the likes of Ghana, Ethiopia, Rwanda and Egypt. 

Egypt in particular has always been a traditional BPO hub – they are significantly cheaper than South Africa and are building strong capability especially when it comes to talent and infrastructure investments from Government – they are facilitating a really strong value proposition.

We need to look at identifying Special Economic Zones, and the benefits that come along with them are well known. That’s definitely something we need to look at.

Another incentive that is critical at the moment is access to skills funding from a supply perspective. As Cape BPO we are fortunate in that we benefit from national, provincial and municipal funding, and the industry benefits because it has access to labour at an augmented cost – essentially access to talent that is trained.

Obviously there are commercial caveats, but there are really good incentives for organisations to participate because whatever they are losing out from demand perspective they can offset that cost from a supply perspective and taking on learners.

It is all  definitely something that we will continue to be focussed on (costs) because if we experience the same rate of price escalation we will essentially be pricing ourselves out of a global market.
 

CAPE CHAMBER: Transport & Connectivity: Since the goal is "inclusive growth," what is the most urgent transport or digital infrastructure project government must deliver to ensure the Mitchells Plain workforce is the most accessible in the metro?

CLAYTON: Cape town is ahead of the curve with the intention to roll out the My City bus route. It is critical – high quality access to transport for staff and at a significantly lower cost than if companies were to do it safely. That is a big one.  The mayor shared plans with us that showed how the roll-out of that route will be in the corridor where the developments are planned.

There are obviously certain specs that need to be placed for offshore and global delivery: the speed of the fibre, latency requirements are two examples. But two major ones are reliable world class MyCitybus routes and the busses themselves. .

On the infrastructure side, it is important to have access to high quality fibre that is consistent and predictable. A lot of these (investor)organisations, especially the multinationals, must ensure their buildings satisfy global standards. Something as simple as fire escapes and lifts is essential – those are critical considerations. And obviously implicit in that is that, within whatever buildings and campuses are built, the safety and security of staff is paramount. That is going to be critical – that these buildings and campuses are well contained and managed.
 

CHAMBER: The "Human" Value Proposition: Countries like the Philippines and India often win on pure cost. How do we market the South African "empathy advantage" and our high "First Call Resolution" rates to premium UK and US markets to justify our price point?

CLAYTON: The South African value proposition has been quite simple: always predicate on rendering world class customer experience at a reasonable price. We have never positioned Cape Town as the cheapest location; it is a premium location where you have access to world class customer delivery at a value for money cost that is not necessarily the cheapest.  

Now we are seeing the evolution of that value proposition. Through twenty years of delivery we have strong referenceable capability in certain verticals or domains which has resulted in a strong talent pool and retention of knowledge – in verticals like retail , utilities, financial services and the emergence recently of healthcare. 

Now it is not just basic customer experience delivery or queries as simple as where is my order. Now it is evolving into a world-class customer delivery with deep domain expertise in those numerous verticals. A critical differentiation at the moment is that we have strong capability and domain expertise in those verticals, but then also strong shared service AND back-office capability.  

If we look at financial services, we have a plethora of financial service professionals in the Western Cape, and the same for legal and for medical. So, there’s a definite conscious pivoting of our value prop to include higher value chain services. 

The bread and butter at moment from pure volume perspective, yes, is customer experience, but like I said this is multi-channel highly complex customer service delivery, across verticals. And especially if you take verticals like financial services, it is such a broad remit. It is not just capability there but scale. Financial services as a vertical is our third biggest.

It is a case that we are a mature location that has deep domain expertise within targeted verticals.