Outsourcing Guides
In an uncertain world, outsourcing to South Africa can save money, grow your business, and broaden your horizons.
Today’s business world seems to be getting more uncertain by the week. As costs rise, profit margins shrink and competition becomes more intense, businesses find themselves besieged on all sides. Every penny counts, but the pressure to do more and expand your business is growing. The only way to achieve both goals simultaneously is to think outside the box, which is why a growing number of companies are considering outsourcing to South Africa.
The costs of outsourcing
Traditionally, outsourcing has been seen as a one-dimensional business strategy. Firms of all sizes have sought to move certain operations, such as customer service, to countries with lower labour costs, such as India, China, or the Philippines. Each business that chose this route has accepted an implicit trade–off. While they may save money, the quality of services might be expected to take a hit. While they were expected to cut costs, the quality of customer service took a hit.
That was certainly the experience of BT, which, in 2015, announced it would be onshoring 80% of its customer service operations back to the UK in the face of widespread customer criticism. By 2020, it confirmed that it had reached this goal with 100% of customer service calls being answered in the UK. In other words, for BT, the cost savings did not prove to be worth the backlash from customers.
Costs came in many forms. As competition increased, people were willing and able to take their business elsewhere. PlusNet in particular exploited this opportunity by placing its locally based call centre staff front and centre of its promotional campaigns. BT learned the hard way that saving money in one part of your business could cost you dearly in another.
Even so, the need to cut costs remains. Businesses aren’t abandoning the concept of outsourcing, but they are looking for alternatives, with one of the most exciting opportunities being found in South Africa.
The rise of outsourcing in South Africa
Outsourcing has become a crucial part of the South African economic landscape. A growth-centred government has invested heavily in education, with the result that the number of graduates entering the workplace has never been higher. However, economic growth struggles to keep up. Although South Africa is the third-largest economy in Africa, unemployment remains stubbornly high, especially among young people. Finding work for the new generation of upwardly mobile professionals has proved difficult, forcing many of them to look for work overseas.
The outsourcing sector offers a way for these businesses to give locally based talent the opportunity it needs. It attracts businesses and jobs from overseas and encourages investment in the country. Over the past decade, the outsourcing sector has enjoyed double-digit growth with more of the same expected over the next ten years. South Africa itself has seen its reputation transformed, with the country twice being named Global Outsourcing Location of the Year.
South Africa’s success comes because it offers a slightly different take on business process outsourcing. While cost is the primary consideration, South Africa also offers a focus on quality, with a good time zone and language match backed up by world-class technological infrastructure. South Africa has an 18% higher customer service rating than traditional outsourcing hubs in India.
Wages in South Africa are significantly higher than in the lowest cost places such as India or the Philippines, but they are still only half the levels in the UK, which means it offer excellent value for money. As such, it represents something of a middle ground – a place where you can still access affordable labour, while avoiding customer backlash on questions of quality and reliability. These combined qualities have also changed the reasons why businesses see outsourcing. No longer is it only about saving money on customer service or administrative duties; now it can apply to almost anything.
A diverse workforce
South Africa offers access to a diverse and talented workforce with skills across the professional spectrum, especially in finance, marketing, and technology. With unemployment remaining stubbornly high, there is plenty of availability, making it an attractive option for any business that has been looking to source top talent, such as in software development or finance, but has been struggling to find people in their local area.
This workforce can be accessed in several ways, including:
•Freelance and contract workers: Businesses are turning to the freelance market in a bid to supplement their existing team. South African freelancers offer high levels of expertise and the ability to collaborate with teams based in the UK and Europe easily via instant messaging or video links. Work can be assigned, completed, and reviewed on the same day, if necessary, reducing any delays or friction in the working relationship.
•BPO: The traditional business process outsourcing sector is thriving with companies offering ready-made teams ready to take on key functions such as customer support or call centres. A good time zone match with Europe and the Middle East is ideal for office hours support. Those countries with a longer time difference can also turn to South Africa for office hours support.
•Remote teams: Businesses are also looking for more long-term relationships, building remote teams of professionals in South Africa to supplement their domestic workforce. Businesses can hire multidisciplinary teams to work with their domestic counterparts or offshore entire departments, such as legal or financial systems.
•Overseas expansion: South Africa’s market is a lucrative target for UK businesses. Hiring locally based teams can provide the benefit of local market knowledge and expertise to give your venture the best possible chance of success.
South Africa’s sector is continuing to develop. The workforce is deepening, education levels are rising, and technological infrastructure is becoming more advanced by the week. As businesses seek new opportunities to find growth, South Africa is setting itself up to be the outsourcing destination of choice for forward-thinking businesses.
