Despite positive economic growth in the early to mid-2000s, the overall level of unemployment (roughly 25%) in postapartheid
South Africa remains one of the highest in the world. Young people (age 15-24, inclusive), as in many other
countries, face particularly high rates of unemployment but South Africa is something of an outlier with youth
unemployment rates far higher than those in other emerging economies (OECD, 2010). This youth age group makes
up roughly a fifth of the South African labour force and has, by far, the highest levels of unemployment (nearly 50% in
2009). While employment did grow between 1995 and 2007, it was outpaced by the increase in the working age
population. The larger increase in the labour force (i.e. those that actually wanted work) meant that unemployment
increased alongside job growth (Burger et al., 2012). Many of the youth, who make up the bulk of the increase in
labour force, are new entrants with little to no work experience. However, nearly 85% of unemployed youth aged 19-
24 have completed or have some secondary school education and unemployed youth, on average, have higher
computer literacy rates than the overall unemployed population in South Africa. While many youth are unemployed,
those who are employed tend to find jobs in formal wage earning positions, predominantly within lower paying
sectors such as wholesale and retail.
Against this backdrop of high and persistent youth unemployment, this report explores the potential of an emerging
sector, Business Process Outsourcing (BPO) to absorb some of these young people into decent work. In particular,
this report explores the possibility of impact sourcing as an emerging sub-sector within BPO which refers to
employing people who are most disadvantaged, with limited opportunity for employment, and will be the principal
workers in business process outsourcing centres to help service clients both domestically and internationally
(Monitor, 2008). The overall BPO sector (also called the Business Process Services (BPS) sector in South Africa), is
currently expanding and is generating new digital and service jobs in the country. The recent global economic
downturn has pushed many international companies to seek ways to reduce business costs. This includes the
opportunity to contract certain non-core business services to suppliers in countries such as South Africa. The most
recent industry report for South Africa estimates that there are now 200,000 jobs in total for both in-house domestic
operations as well as offshore work (BPeSA Western Cape, 2012). The majority of BPS work is currently located in
major urban areas such as Johannesburg, Cape Town and Durban where experienced labour is more accessible.
However, many smaller municipalities are now targeting BPS activities as part of their growth and development
frameworks. Most jobs in South African BPS are of domestic (captive and onshore) clients and attract young South
African job seekers. The South African government‟s current incentives package for offshore business process
activities, alongside its Monyetla or BPS youth training initiative, is a clear indicator that BPS forms an important part
of its industrial strategy to attract foreign investment and to grow the sector.