Boom in expansion of office properties witnessed in Western Cape BPO sector
In the vibrant city of Cape Town, the Business Process Outsourcing (BPO) sector is making a significant impact, not just within the city's central business district (CBD), but also in surrounding areas. This growth has been evident since the end of the pandemic, with the sector adding over 10,000 jobs annually.
One of the latest additions to this expanding landscape is Sigma Connected's call centre in Paarl, a town located approximately 45 minutes from Cape Town. By setting up shop in Paarl, Sigma Connected aims to reduce commute for local staff, making work more accessible and convenient.
The BPO sector is a significant contributor to the region's commercial property occupancy, having employed at least 90,000 people as of 2024. To accommodate this workforce, around 105,000 square meters of office space is required. Operators, however, are moving away from the CBD to areas like Century City, Salt River, Wynberg/Claremont, and even the Cape Town CBD, in a bid to reduce travelling time and transport costs for their staff.
The CBD, while once a hub for call centres, is approaching peak capacity and lacks suitable office towers for this purpose. Consequently, call centres are being established in areas like Diep River, Mitchells Plain, and Retreat, where high commuting costs for employees are a concern.
Despite the advantages, setting up call centres in townships presents several challenges. These include infrastructure deficits, financial exclusion and informal economies, digital illiteracy and technology penetration, safety and security concerns, and limited suitable office space. Internet connectivity in townships is often unreliable, slow, and unaffordable compared to urban centers, making it difficult to maintain the communication quality essential for call centers.
However, there is a silver lining. Government and development initiatives like the UNDP's DIME project focus on modernizing township economies digitally and improving informal business structures, which may indirectly foster better conditions and support for businesses such as call centers. Some call center operators are exploring township-based offices, implying a potential municipal openness or community-level support to such ventures, though direct incentives are not elaborated.
In conclusion, while call center operators encounter infrastructural, economic, and social challenges in South African townships, broader development programs aim to improve the digital and economic environment, possibly creating more favorable conditions over time. The BPO sector, with its continued growth, is set to play a crucial role in Cape Town's economic landscape.
- The BPO sector's expansion into regions like Cape Town's surrounding areas, such as Diep River and Mitchells Plain, is not only driven by reducing commute costs for staff, but also by the lack of suitable office towers in the CBD.
- The real-estate industry is experiencing a shift, with BPO operators preferring areas like Century City, Salt River, Wynberg/Claremont, and even the Cape Town CBD, over the CBD itself, to reduce travelling time and transport costs for their workforce.
- The setup of call centers in South African townships poses several challenges, including infrastructure deficits, digital illiteracy, and safety concerns, but government and development initiatives are working towards modernizing these economies digitally, which may indirectly support businesses like call centers.
- The growth of the BPO sector, with its requirement for office space, presents an opportunity for the investing community, especially in areas where suitable real-estate infrastructure is being developed to accommodate this sector's growing workforce.
