For the digital revolution to make a dent in South Africa’s unemployment, it has to provide work for a wide range of skills, with a particular focus on lower-skilled South Africans, says South Africa in the Digital Age (SADA).
SADA is an initiative set up to develop a forward-looking economic strategy in the digital age. It is a joint venture by University of Pretoria’s Gordon Institute of Business Science (GIBS), Genesis Analytics and the Pathways for Prosperity Commission.
Its core mandate is to answer the question: what are the income-generating opportunities for South Africans in the digital revolution? The group has published a report which maps out several pathways for the country to create income-generating work in the digital age, detailing the practical actions required.
One such pathway entails exporting globally-traded services at scale.
SADA set out to answer a pivotal question: what sort of digitally traded services are we South Africans best positioned to provide at scale to the world?
The answer, it said, is the category of activities known as global business services (GBS). GBS encompasses call centre work, coding, other ICT services, finance, accounting and legal support, and could be expanded to include new services such as tutoring and long-distance care.
SADA noted that a quarter-million South Africans already work in GBS, more than double the number employed in the automotive sector. Of these, some 50,000 already service off-shore demand, a number growing by the extraordinary rate of 24% a year, which makes GBS exports one of the fastest-growing job categories in the country.
Working closely with the Department of Trade and Industry and the industry body BPESA, SADA said that with the right policy and business environment, another 100,000 GBS export jobs can be added by the end of 2023.
Five GBS growth levers have been identified – expansion in target source markets where more demand can be captured, re-shoring work done offshore for South African companies, growing ‘shared services’ niches, developing ICT/digital outsourcing, and growing new types of personalised services.
“If these levers can be activated at speed, the 2023 target is achievable,” the group said. “If the levers can be activated at scale, an even larger prize awaits.”
SADA estimates that 500,000 GBS export jobs could be generated by 2030 if a national programme encompassing training, financial and other support commensurate with the opportunity is sustained.
South Africa’s competitive advantage lies in the interpersonal and linguistic capabilities of our people, it said.
It stressed that for the most part, these are not elite jobs. In terms of qualifications, a South African matric is sufficient. But these matrics do need to acquire additional skills.
Job creation projections over yellow and green target periods
SADA highlighted countries including India and the Philippines where capturing this demand for global business services can stimulate serious scale, and achieve a commensurate growth in employment creation and export earnings.
The Philippines’ BPO sector grew threefold in 10 years, contributing one-third of the country’s export earnings and employing 1.3 million people by capturing about 15% of the global demand for BPO services.
India’s export IT and BPO sectors are still growing at around 8% per year, contributing over one-quarter of the country’s export earnings and employing over 4 million people, SADA said.
Distribution of possible jobs created across opportunity areas
SADA provided a summary of the actions that are most relevant to this pathway of exporting globally-traded services at scale.
Under the title: ‘quick wins’ it pointed to actions that can be taken in the next year:
- Improve efficiency of South Africa’s work visa process: South Africa already has a framework for allowing critical skills in shortage to be brought in from foreign nationals. However the process is inefficient and needs to be improved.
- Update the relevance of the critical skills list: the work visa process for critical skills in shortage is linked to the critical skills list which is currently outdated and not driven by industry. This needs to be rectified by updating the list.
- Re-channel budgeted government funds behind jobs in demand: the Sectoral Education and Training Authorities must re-channel skills development funds for training that is most likely to fill jobs in demand.
- Empower public private teams: industry associations and the dti’s agencies responsible for managing investment incentives and marketing South Africa as an investment destination abroad need to be empowered with rapid approval capabilities for work visas and deals to improve the pace at which global companies relocate work to South Africa in the digital economy.
- Continue competitive and sufficiently broad incentives: the dti already provides a successful incentive scheme for the job creation in the GBS sector. Going forward, this scheme will need to be adapted to ensure it remains relevant.