Cost & Salary Insights
South Africa’s combination of high quality, excellent infrastructure, government support and affordable wages represents excellent value for money.
When companies searched for outsourcing destinations, they traditionally asked themselves one question, and one question only – how much will this cost? The global rush to outsource back office services to places such as India was fuelled by a desire to cut costs to the bare minimum. However, customer complaints and security risks have prompted companies to look for other options.
Principle among these in South Africa. In the last few years, it has twice been named Outsourcing destination of the year. The market has experienced double-digit growth with further expansion predicted for the next ten years. Companies from across Europe, the Middle East and the USA are considering shifting outsourcing strategies away from the lowest cost locations such as India or the Philippines. However, for most, the question still comes down to cost. Today, though, the true cost of operations can be a complicated, multidimensional calculation.
Cost of labour
The primary metric for outsourcing has always been the cost of labour. Average wages in India are between £400 and £500 per month compared to £2,900 to £3,500 in the UK. In the first quarter of 2025, South Africa’s average wages came out at R28,290 per month, or £1,180.
Compared to India, therefore, pay is almost double, which means those who judge the calculation purely on up-front numbers will still stick with India. However, to understand the true cost of doing business, we also need to look at other factors including quality, government support, security risk and reputational impact.
Quality
South Africa has put quality front and centre of its product offering. Workers might be cheaper elsewhere, but average wages are still less than half the levels of the UK in many industries, which means South African workers can still offer a fair discount on their UK counterparts.
In return, South Africa’s outsourcing industry. According to the GBS South Africa Investor Handbook, South African outsourcing firms have an 18% higher level of customer satisfaction than India. Where Indian companies have been dogged by complaints about language difficulties and cyber risk, South Africa offers high levels of English proficiency with a clear, easy-to-understand language.
BPO companies in South Africa are backed by state-of-the-art technology, allowing them to offer greater levels of personalisation and flexibility to their hiring companies.
High quality means greater levels of customer retention and higher revenues. Customers who complain about poor quality outsourced services have shown a willingness to vote with their feet and seek out alternatives elsewhere. For customer-focused roles, especially, keeping customers happy helps you avoid lost business and also opens up new revenue opportunities.
Government support
South Africa’s government has been highly supportive of the BPO industry. To them, it’s a chance to bring jobs from overseas to keep their most talented people working within the South African economy. As such, they’ve introduced a range of national and local incentive schemes to encourage investment.
In 2007, the government expanded its existing BPO & Offshoring Incentive Scheme to the BPS incentive to provide grants to companies based on the number of jobs they created. Companies can benefit from investment grants ranging from ZAR 37,000 to ZAR 60,000 for each offshore-facing agent recruited. Further support is also available for training.
On top of that, you may also benefit from provincial schemes run by individual provinces. For example, in Western Cape firms setting up overseas facing call centres can get up to six months free internet, voice and data services for every 200 jobs they create.
Other support can also be available for companies investing in areas with low levels of employment. These tend to be beyond the main business hubs. There might also be additional incentives for those companies investing in training and jobs for women or minorities.
Security risks
In the digital age, with rising instances of cybercrime, security risks have become increasingly important. Poor levels of governance have seen countries such as India become a hotbed of BPO fraud and cybercrime. When moving customer data to third countries overseas, it’s vital to ensure that their security can be trusted. Even when data is controlled by a third party, legal responsibility rests with your company, and fines can be extremely damaging.
South Africa has placed governance front and centre. The government has introduced robust data protection regulations closely reflecting other international standards such as GDPR. BPO companies have best-in-class cyber risk provisions and can provide secure pipelines for data that comply with all necessary regulations. Managing customer data in South Africa, therefore, reduces the risk of data protection fines and other risks that can impact bottom-line performance.
When considering hiring in any third country, therefore, the potential cost of any fines must be factored into any cost calculation.
Reputational impact
All these problems, coupled with customer dissatisfaction, can have a devastating impact on your business’s reputation and customer relationships. Any company that fails to respond promptly to a loss of client data will struggle to regain the customers’ trust. Breaches such as these also often play out in public, which represents a significant PR problem for your company.
The costs of this will come in compensation and lost business, both in the present and in the future. These costs can be ongoing and represent a major drag on your business performance for the long term.
The cost of outsourcing to South Africa
When calculating the cost of outsourcing, therefore, it’s important to look at the whole picture rather than just the bottom line. Many companies simply look at the overall cost of labour, namely how much each employee will set them back. However, if you sacrifice quality for costs, you can encounter multiple associated expenses across the entire process.
South Africa, on the other hand, offers access to high-quality services, first-rate infrastructure, best-in-class governance and highly skilled individuals. Coupled with the prospect of generous business incentive schemes, the true cost of doing business may even be lower than in the usual low-cost locations such as India. This combination of quality and affordability has powered South Africa into the forefront of the BPO sector.
