Booming Expansion of Office Buildings in Western Cape BPO Sector
In the post-pandemic era, the Business Process Outsourcing (BPO) sector in the Western Cape, South Africa, has emerged as a significant driver of office commercial property occupancy. This shift has seen call centre operators moving beyond the Central Business District (CBD) to locations that offer reduced travelling time for staff and lower transport costs.
Operating outside the CBD presents both opportunities and challenges for these call centres.
Opportunities Abound
The Western Cape, particularly Cape Town, is renowned for its tech and BPO hub status, boasting a well-educated population and a large pool of call centre employees, including those trained for international BPO roles. This talent pool offers cost advantages, as operating outside the CBD often means lower rental and operational costs compared to prime city centre locations.
The region also benefits from world-class infrastructure, including reliable internet and telecoms suitable for international customer experience services. This infrastructure, combined with South Africa's cultural and language alignment with key markets such as the UK, US, and Australia, makes it an attractive destination for global contact centre operations.
Challenges to Overcome
Despite these advantages, there are challenges to address. Locations outside the CBD may have less efficient transport links, potentially affecting employee retention and punctuality. Infrastructure gaps might also be present in some areas, requiring additional investment in connectivity and facilities.
Attracting skilled labor to peripheral locations can be challenging, as many might prefer the convenience of the CBD. Competition for these skilled staff is also fierce, particularly for roles requiring specialized language or sector expertise.
Setting Up Call Centres in Townships
Setting up call centres in townships poses additional challenges, including a lengthy rezoning process, establishment of infrastructure, and commercial risk. Despite these hurdles, demand for call centre space has led BPO operators to set up across the region, even in areas like Diep River, Mitchells Plain, and Retreat, where high commuting costs for employees make these locations attractive.
A Growing Sector
Despite these challenges, the BPO sector in Cape Town is projected to add over 11,000 jobs in 2025. Notable companies like UK operator Sigma Connected have already set up shop in Paarl, creating 250 jobs in the first phase and aiming to grow to around 1,000 roles in the coming years.
The BPO sector has been a major contributor to office space absorption in Cape Town, accounting for 60% of net office space absorption over the past 18-24 months. To accommodate this growth, the sector needed to find over 100,000m2 of office space every year since the end of the pandemic.
BPO nodes have emerged in areas like Century City, Salt River, Wynberg/Claremont, in addition to the CBD. The BPO sector in the Mother City employs at least 90,000 people, with approximately 10,500 people employed in the Western Cape by the BPO sector in 2024.
However, the CBD is approaching peak capacity, and suitable office towers for call centres are hard to find. Buildings typically have a capacity of 500m2 to 800m2, while a call centre needs about 3,000m2.
In conclusion, while establishing a call centre outside the Western Cape CBD can offer cost savings and tap into a large skilled workforce, operators must tackle potential issues around transport, employee accessibility, and competitive recruitment dynamics to ensure success. The existing robust BPO ecosystem and growing demand for contact centre roles indicate promising opportunities if these challenges are managed effectively.
- Call centre operators expanding outside the CBD benefit from a large pool of well-educated workers, resulting in lower operational costs compared to prime city centre locations.
- South Africa's cultural and language alignment with key markets like the UK, US, and Australia, combined with world-class infrastructure, make it appealing for global contact centre operations.
- However, establishing call centres outside the CBD presents challenges, such as potential transport issues, infrastructure gaps, competition for skilled labor, and attracting workers away from the city centre.
- In a bid to accommodate the growing BPO sector in Cape Town, call centres have been set up in areas like Diep River, Mitchells Plain, and Retreat, despite the challenges posed by lengthy rezoning processes, infrastructure development, and commercial risk.
- With a predicted addition of over 11,000 jobs in the BPO sector in 2025 and a demand for over 100,000m2 of office space each year, the sector is projected to experience significant growth in the coming years.
