South Africa's BPO Sector Faces Skills Crunch Amid AI Pressure

The South African business process outsourcing (BPO) sector, which added 26,346 jobs last year, is facing a skills crunch due to the increasing pressure of artificial intelligence (AI) on labour markets and industries. According to Tiara Pathon, AI skills director for Microsoft in South Africa, the government cannot afford to delay in implementing education and skills policies to address this challenge. Pathon was speaking at the Thrive Global Business Services (GBS) and BPO Conference in Cape Town.

The World Economic Forum Future of Jobs Report listed data analytics, cybersecurity, and AI as top skills required for promising future careers. Microsoft launched an AI skills initiative in 2024 to address this need. Pathon emphasized that young people entering the sector need to be digitally literate and AI-fluent, especially considering that Africa will have the world's youngest population under 25 by 2030. Microsoft and the department of higher education and training have partnered on a programme called Ikamva Digital to support TVET colleges with an AI curriculum.

The Quarterly Labour Force Survey released by Statistics SA found an increase of 0.1 percentage points in the unemployment rate to 33.7% in the third quarter of 2026. The official unemployment rate increased in five of the nine provinces, with the largest increases recorded in Mpumalanga, Eastern Cape, Free State, and Gauteng. Deidre Samson, strategic futurist and head of skills and training partnerships at The Collective X, noted that entry-level jobs are still available, but different skills will be needed, including digital enablement.

Samson analysed 57 job roles in the BPO sector with BPESA and found that while programming skills are still essential, automation will change the nature of the work. Employees will need to understand what is wrong and augment their role. Reshni Singh, CEO of BPESA, emphasized that the industry needs to reconsider how it defines value, moving beyond traditional measures of labour costs and hours worked to guarantee future competitiveness.

The South African BPO sector has grown significantly, expanding its market beyond the UK to Australia and the US. However, to truly thrive, the sector must develop future-ready skills and move towards higher-value services. Singh noted that South Africa has built a globally recognised GBS sector, but it must adapt to changing demands.

Pathon highlighted the challenges of updating education curricula to keep pace with AI advancements. She noted that it takes too long for South African universities to rewrite curricula and obtain accreditation, by which time the technology has changed. The Ikamva Digital programme aims to support TVET colleges in addressing this need.

The BPO sector will continue to evolve, with a focus on developing skills that complement AI. Industry leaders emphasize the need for collaboration between government, education institutions, and the private sector to address the skills crunch and ensure the sector's future competitiveness. The sector's growth and job creation potential depend on its ability to adapt to changing demands and develop future-ready skills.

Key points

• The South African BPO sector needs to develop future-ready skills to remain competitive amid AI pressure.
• Microsoft and industry leaders are calling for government action to address the skills crunch.
• The sector added 26,346 jobs last year, but faces challenges in keeping pace with AI advancements.