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 well attracting R303 million in direct investments.
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.
Business Process Services (BPS) Grant
Objectives of the Business Process Services Grant
Government funding and grants such as this one were created to attract investment and provide job opportunities.
1. The BPS programme is part of a holistic value proposition to position South Africa as a preferred location of Business Process Outsourcing operations and thus creates employment opportunities through offshore activities – this is the primary objective.
2. The secondary objectives consist of:
- Creating employment opportunities for the youth; and
- Contributing to the country’s export revenue and foreign exchange from offshoring services.
Benefits of the Business Process Services Grant
- 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 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 BPS will pay a grant calculated at up to R124 000 per job created by a BPO operation located in South Africa.
- A graduated bonus incentive which is offered for greater job creation paid once in the year in which the bonus level is first achieved.
- The base incentive is paid for a period of five years (60 months) from the date on which the offshore job is created.
- Qualifying companies may be awarded an incentive per new employee of R16 000 to R40 000 together with a possible once-off bonus grant for creating more than 400 non-complex jobs or more than 200 complex jobs.
Qualifications for application of a Business Process Services Grant
- Submit application in advance of appointing new employees.
- Have secured an offshore BPS contract.
- Be a level 4 B-BBEE contributor within 12 months of securing a BPS approval; new companies are required to submit a plan showing how a level 4 B-BBEE status will be reached within 24 months of approval date
- Must be performing BPS activities.
- May be involved in starting a new operation or expanding an existing operation in order to perform BPS activities.
- By the end of three years from the start of the new project or expansion, must have created at least 50 new offshore jobs in South Africa.
- Must commence its commercial operations no later than six months from the date on which the BPS incentive grants were approved.
- 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.
- 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.
- The project must be financially viable.
- Comply with all statutory regulations.
- Be a growing concern
Contact us for assistance in seamlessly accessing the Business Process Services (BPS) Grant…