The South African Government carried out the Business Process Services (BPS) incentive programme from January 2011 with the objectives of attracting investment and creating employment opportunities in South Africa through offshoring activities. Since the programme's inception, the incentive has resulted in the creation of about 9 077 new jobs with an average growth rate of 26% per annum during the period 2011-2014.
As part of Government’s commitment to deepen the country’s profile as a preferred location for the outsourcing of BPS, an implementation evaluation of the incentive programme was undertaken with a recommendation to continue it beyond its current three-year duration. This has resulted in the new BPS incentive programme.
The primary objective of the incentive is to create employment in South Africa through servicing offshore activities. The secondary objectives of the programme include:
Creating employment opportunities for the youth; and
Contributing to the country’s export revenue from offshoring services.
A base incentive is calculated on projected offshore jobs to be created based on a tapering scale and is awarded on actual offshore jobs created as per the definition of full-time equivalents.
The base incentive offer a differential (two-tier structure) incentive for non-complex and complex jobs based on a fully loaded operating cost per job.
The base incentive is paid for a period of five years (60 months) from the date on which the offshore job is created.
The base incentive will be determined at application stage, depending on the fully loaded operating cost.
The bonus incentive is to be paid only at the end of year five, where the applicant becomes eligible for it.
the dti will determine whether an applicant is eligible to benefit from the BPS incentive, based on the requirements that an applicant (legal entity):
Must be performing BPS activities;
May be involved in starting a new operation or expanding an existing operation in order to perform BPS activities, which may be operated from more than one physical location in South Africa;
Must, by the end of three years from the start of operation of the new project or the expansion, have created at least 50 new offshore jobs in South Africa, as defined in the BPS Incentive Programme Guidelines;
Must commence its commercial operations no later than six months from the date on which the BPS incentive grant was approved. Failure to reach this target date will lead to the cancellation or disqualification of the application, thus requiring the applicant to submit a revised application for the grant;
If in a joint venture arrangement, must have at least one of the parties registered in South Africa as a legal entity;
The project must employ at least 80% youth as part of its employment establishment;
Have secured a contract for offshore BPS activities;
Comply with the B-BBEE requirements;
Submit an application for the BPS incentive prior to the engagement of qualifying jobs;