Outsourcing Guides
It’s the traditional market leader against the up-and-coming challenger. Should you outsource to India or China?
The business process outsourcing (BPO) industry continues to grow, but it looks slightly different today than in the past. In the 90s and 2000s, some of the best-known brands in the West were rushing to outsource business operations to other countries with much lower labour costs. However, many suffered a furious backlash from their customers, prompting some to relocate. Today, there’s a growing recognition that low costs shouldn’t be the only consideration, which has seen other outsourcing hubs come to the party with a nuanced offering of quality and affordability. Chief amongst these is South Africa.
Outsourcing in South Africa
South Africa’s BPO sector is growing rapidly. It’s one of the major sources of investment and jobs in the country. For a government eager to find ways to keep its most talented people working in its domestic economy, it’s a Godsend – a chance to bring high-paying jobs from overseas into South Africa to foster growth and economic development.
To that end, it has been quick to encourage the outsourcing sector with government incentives and support.
South Africa’s success stems from a recognition that the traditional low-cost outsourcing model had critical weaknesses. Companies were achieving heavy savings on costs, but that came at the expense of their customer relationships. Poor quality customer experiences were prompting people to look for other services elsewhere. What they saved on the one hand, they would lose on the other.
South Africa’s offering was more nuanced. Although labour costs are slightly higher than in India, they offer better quality and reliability, which pays dividends further down the line.
Outsourcing in India
India, meanwhile, has possibly the most highly developed outsourcing sector in the world. It has a huge population with a relatively high proportion of graduates looking for well-paying jobs. With labour costs being a fraction of the West, it was perfectly placed to tempt jobs in from overseas.
Companies were quick to move operations such as call centres and customer support to India, where a growing collection of powerful BPO companies were ready to service companies in the UK and elsewhere.
However, for customers, the experiences were not always what they hoped. Complaints grew about communication difficulties with call centre staff often having thick, difficult-to-understand accents. Customers often found it difficult to get the help they needed, with people often having to call back several times until they got what they were looking for.
Aside from anything else, moving operations to places such as India caused a significant hit to a business’s public image. Taking jobs overseas sends a dreadful message to your customers that they are simply not particularly valued by the business.
Some customers voted with their feet, and other companies such as PlusNet were quick to seize the initiative. Spotting a desire for quality, they promoted their business on the basis that its call centre staff were based in the UK and staffed by local people. It worked, and many other businesses followed suit, prompting a flurry of press articles questioning whether the BPO sector was on the downside.
India’s prospects were not helped by rising instances of fraud and cybersecurity risks. BPO fraud rose quickly, with criminals posing as outsourced call centre operatives. Poor levels of governance saw a rise in data breaches, while corruption became a growing issue. With cybercrime on the rise, outsourcing to India has become full of risks.
South Africa versus India, which is better
India’s sector has experienced some negative headlines, but it remains robust. Even today, businesses are willing to risk the ire of their customers and take operations to India. However, India’s offerings remain painfully one-dimensional. If costs are the only thing you’re interested in, then India’s the place to be.
South Africa is more complex. It has earned itself a reputation for quality and reliability. Governance and technological infrastructure are world class which means protections against fraud and cybercrime are highly robust.
Fluency in English with a clear and easy-to-understand accent is vital and avoids any of the communication barriers that have plagued outsourced customer service sectors over the years.
Moreover, as technology improves, the range of services on offer has widened beyond customer service. Companies are hiring staff in South Africa across all sorts of professions, from marketing to software development and much more. Creative professionals are now regularly working with their counterparts overseas on projects such as new websites, software platforms or marketing strategies.
In essence, it’s like the difference between a value supermarket such as Aldi and Lidl versus a middle-market mainstream option such as Tesco. If you want the lowest prices, you’ll always go to the budget markets, and there will always be a market for that, but if you value quality, then it’s worth paying slightly more.
Cutting costs is not always a one-size-fits-all exercise. Businesses often make the mistake of viewing their finances in the same way as a household. However, if you save money on one outgoing, it won’t cost you money elsewhere in the way that savings on customer service could see a drop in revenue as your customers seek out better experiences elsewhere.
Which option you choose will depend greatly on your needs and attitudes as a business. If you feel that saving money on staff costs will not impact customer retention levels, then India
might be the option for you. On the other hand, if you want to drive growth through better customer engagement, South Africa will be the choice for you. Ultimately, as with supermarkets, the decision will depend on the individual, but as we move into a more high-tech business environment, the world of business process outsourcing will continue to shape business strategies in one way or another.
