Outsourcing Guides
South Africa offers an exciting outsourcing destination for companies across Europe, America, and the Middle East.
The balance of power in the business process outsourcing world is shifting. A market that was once dominated by India and the Philippines is shifting towards other alternative countries such as South Africa. Driving this change has been a shift in focus for hiring companies away from a simple cost equation with a greater focus on value for money. Although labour costs might be more expensive in countries such as South Africa, its superior reputation for quality and generous government incentives translate into a positive overall return on investment.
What companies have outsourced to South Africa?
The move towards South Africa began around 20 years ago with a few companies moving operations from low-cost locations such as India or the Philippines into South Africa. An early mover was German airline Lufthansa, which switched its contract outsourcing focus from India to South Africa by moving customer service operations to Cape Town and Johannesburg.
Virgin, Accenture and Carphone Warehouse are also among those names which have opened BPO centres in South Africa.
Global Outsourcing firm Sykes, which had always been a well-known operator in India, spotted the direction of travel and opened up an outsourcing service in South Africa.
Common reasons for making the move include:
•English language skills: English is the main language in South Africa and is widely spoken across the country, making it a perfect match for most Western markets. While Indian-based call centres attracted complaints for thick, hard-to-understand accents, South African operators have a clear, neutral-sounding accent that is familiar to customers in the West.
•Matching time zones: While Asian based call centres have a significant time difference with UK or European customers, South Africa is a much closer match. It’s easy to align remote operations in South Africa with the working day in Europe or the Middle East. This match is ideal for customer support roles and for outsourced functions in which real-time collaboration is mission-critical.
•Higher staff retention: Indian BPO companies have notoriously high turnover rates, making it difficult to retain any consistency in service offering. BPO staff tend to be assigned to certain companies and will struggle to offer a truly personalised service. In South Africa, staff are more likely to be in it for the long term, which means for more sustainable, consistent and reliable services.
•Government incentives: South Africa’s government is pro–growth and is keen to encourage foreign companies to up their investment in South Africa. The business process outsourcing industry has become one of the major sources of employment for South Africans, bringing much-needed jobs and income from overseas into the economy. Businesses that create these jobs can benefit from a range of tax credits and grants based on the number of jobs they create. Local regions also have their schemes, such as the Western Cape, an incentive scheme to encourage export-oriented firms to set up in the country.
•Technological infrastructure: The government has invested heavily in the country’s technological infrastructure over the past few years. Super-fast internet is widely available across all major cities, which means BPO companies can support Western-based clients with the latest IT solutions.
•Regulatory alignment: A key component of South Africa’s success has been a recognition of the importance of governance. While other countries have suffered with high levels of cybercrime and BPO fraud, South Africa has implemented best-in-class security measures with a close regulatory alignment with global data protection regulations. When moving data into South African-based companies, you can do so with the reassurance of knowing it will be subject to the same level of controls that you’d expect in Europe.
What jobs are being outsourced
Most of the early movers into South Africa focused on customer-centred roles such as call centres or technical support. However, South Africa’s highly talented workforce, coupled with recent improvements to digital infrastructure, has created outsourcing opportunities at every level of the ladder.
Today, it’s possible to not only outsource basic functions, but also more advanced functions such as marketing, financial services, insurance, technical support, software development, web design and legal services.
South Africa’s education system has come on in leaps and bounds in recent times. The number of graduates is at an all–time high, with growing numbers of professionals in all disciplines. However, the developing South African economy is struggling to provide employment opportunities for all who need them. For hiring companies, this means there’s a plentiful supply of high-quality professionals in sectors that are traditionally in short supply within the domestic markets.
A perfect case in point is in software development. Digital transformation has companies seeking to transition as quickly as possible. However, talented software developers are in short supply and can command high fees. For small and medium-sized businesses with limited resources, competing with top talent against larger, better-funded companies can be impossible.
Outsourcing to South Africa, therefore, is a chance to find talent that might not be available in your local area and to do so at a price you can afford. Labour costs in South Africa can be around 50% the level in the UK. Working with talented software developers, therefore, is a good way to access the skills you need and level the playing field with larger competitors. Having easier and more affordable access to skills helps companies to access vital skills they need to drive their businesses forward and maintain competitiveness. By hiring professionals in South Africa, therefore, businesses can overcome critical talent and capacity gaps and unlock new growth opportunities across all of their key business operations.
The emergence of South Africa has already dramatically changed the outsourcing sector. Its ability to provide affordable labour, but underpinned that with first-class infrastructure support, overcomes many of the common problems with the BPO sector and gives hiring companies a chance to have the best of all worlds – affordable labour without compromising on quality.
