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Outsourcing to South Africa provides businesses with a host of opportunities to streamline operations, access new talent and transform their business horizons. With a highly skilled and diverse workforce, lower costs of labour, positive regulatory environments and a robust infrastructure, it is increasingly being seen as the go-to outsourcing option across all sectors. Key to this growth is the secret sauce that sets South Africa apart from its traditional competitors in this space – a combination of low cost, value for money and high quality.
Here are just some of the reasons driving interest in the South African outsourcing market.
The cost of labour in South Africa can be around 50% or 60% of that in the UK, Europe or the US. According to HFS research, the South African outsourcing market has grown by around 30% in the last five years.
The South African outsourcing market is predicted to grow by more than 10% by 2030. South Africa has a labour force of more than 24 million.
Revenue from the outsourcing sector in South Africa is expected to hit $2.26bn in 2026, up from $1.89n bn in 2024.
Much of that growth comes from the customer service sector, which remains the dominant force in the outsourcing sector, but South Africa’s real strength comes from the sheer range of services that can be outsourced.
A good language match, together with a similar time zone and fast, high-speed digital communications, facilitates free-flowing information exchange between a South African-based workforce and the hiring company.
Education levels are high, leading to a rich source of talented professionals across all disciplines. As such, we are seeing the range of outsourced services expanding dramatically into more sophisticated and highly skilled professions such as:
Strong written and verbal skills in English make South Africa a great option for marketing solutions, including PR and content marketing. Written content can be sourced at a price premium without the inevitable drop-off in quality that comes with other countries, such as India, where English is a second language.
Indeed, just about any function in your company could potentially be outsourced to South Africa. South Africa has the talent and the technological infrastructure to facilitate fast, seamless, and convenient communication between multi-disciplinary teams across all sectors. Professionals may work on a freelance or full-time basis with teams often containing a mixture of professionals with many different contractual terms.
For most companies, the overriding consideration will be the cost of doing business in South Africa. Operating costs are high, and profit margins are slimming down. Every business is looking to optimise efficiencies where they can.
The cost of labour in South Africa is higher than in traditional outsourcing hubs such as the Philippines, India or China. However, it is still a sizeable discount in the UK and other European countries. Costs vary from one job role and city to another.
Durban has a reputation as being the more affordable outsourcing hub. Salaries can be around 15% lower than in high-cost locations such as Johannesburg, and operational costs are also significantly lower.
Johannesburg is often seen as a high-cost location, but it has first-grade infrastructure and extensive reserves of talent, especially in sectors such as finance.
Cape Town sits somewhere between the two and is often seen as an outsourcing hub with companies being attracted by its combination of a large talent pool, excellent technological infrastructure and widespread English proficiency. The city is home to many of the world’s largest corporations and outsourcing firms.
When comparing the cost of outsourcing to South Africa with other locations, it can be difficult to compare like for like.
For example, purely from a bottom-line perspective, outsourcing a call centre to India might look like the best possible option. However, that’s not the only cost involved.
The quality of customer service is being seen as an increasingly vital business metric. Get it right and you can see lasting, profitable business metrics. Good relationships also lead to repeat custom, higher revenues per customer and new revenue opportunities.
Opportunities such as these depend on communication, and when customer service agents don’t share a common language with their callers, those opportunities tend to be missed.
Customers have also often expressed their frustration at seeing business operations moved to third countries. Communication difficulties create friction in the relationship and can lead to customers seeking alternatives. Lost business is a cost that not every business appreciates.
The cost proposition, though, is slightly more complicated. South Africa is keen to promote the outsourcing sector and sees it as an invaluable source of investment and jobs. The main source comes in the Global Business Services (GBS) Incentive, which is designed to boost employment in South Africa through offshore operations. Companies that create a minimum of 30 new jobs, with at least 60% targeted at people between the ages of 18 and 34, can qualify.
The incentive comes in three tiers, with levels rising with the complexity of the jobs involved.
The scheme therefore provides a clear impetus for any company seeking to advance into more ambitious and professional-based roles. It’s an attempt to provide high-quality job opportunities for South Africa’s growing reserves of talented and ambitious professionals.
Other incentives may be available, supporting those companies that invest in regions that have high levels of unemployment or supporting minorities through schemes such as Black Economic Empowerment incentives. Specialist Economic Zones also provide reduced corporation tax rates and employment tax reductions in some cases.
Once these tax incentives are taken into account, the overall cost of hiring staff in South Africa will often be much lower than it first seems. In some cases, it may even be lower than places such as India, once all incentives are factored into the equation.
South Africa’s government sees the BPO sector as being critical to growth. That notion, together, lends itself to a favourable regulatory and tax regime that places foreign companies as partners in the economic development of South Africa.
In short, South Africa offers unrivalled value for money. Labour costs are much lower than average, quality is higher, and government incentives are generous. All of which makes for an extremely attractive deal for outsourcing companies.
If you intend to employ people in South Africa, you need a legal entity. This will be expensive and requires setting up a complete infrastructure to manage locally based teams, including admin, financial, and recruitment support staff.
Advantages: Full control over recruitment, hiring and firing.
Disadvantages: It can be expensive.
Businesses may outsource to South Africa for many different reasons:
We live in an international marketplace, not just for goods and services but also for jobs.
