The average salary in South Africa is on the rise but is still much lower than in countries such as the UK or other Western economies.
Businesses outsource operations overseas for many reasons. To some, it’s a chance to broaden the talent pool or expand into another country. However, top of any list is the ability to save money and attract staff in a budget-friendly manner. That’s why India and the Philippines have always led the way as outsourcing destinations. However, changing customer demands and evolving business strategies have seen people look towards other locations such as South Africa.
South Africa offers a slightly different proposition from some of the low-cost destinations. While the cost of labor is generally less than in places such as the US, UK, or Australia, it has much more to offer including a highly diverse and educated workforce, friendly regulatory environment, and familiar business culture.
All of this means businesses can outsource all sorts of professional roles from customer services, to marketing, content writing, IT, and much more. Even so, costs will always be a major factor which is why one of the first questions businesses ask when considering outsourcing is what is the average salary in South Africa?
Average salaries
Salaries can vary from profession to profession with some being more competitive than others, compared to Western economies. Halfway through 2024, the average monthly earnings in the formal sector was R27,450, a 4% increase from the same period in 2023.
However, there is a wide variation in salary levels with the top earners bringing in much more than the lowest. Men also have significantly higher salaries than women.
Some of the highest-paid professionals can be found in the IT and finance sectors and levels can vary enormously from one region to another. As such you can only make truly direct comparisons from one industry to another. In call centers, for example, the average starting salary for South African agents was around 30% of that of their counterparts in the UK.
The average salary for IT professionals in South Africa is ZAR 16,400, or £740 per month, while UK workers can expect to earn around £3300.
Costs, therefore, can vary and wages have been rising in the country as the economy picks up. The government has a positive pro-growth agenda and is keen to develop every area of the economy. That means increasing the number of graduates, improving technological infrastructure, and raising the number of highly qualified professionals in the sector.
Even so, generally speaking, there remains a sizeable discount on South African workers compared to the UK. For that businesses can also benefit from everything else that comes from working in South Africa including:
• Educated workforce: University attendance is high leading to a highly diverse and educated workforce across a range of disciplines.
• Good language skills: English is commonly spoken making South African call center agents a great match for customer service roles.
• Good IT structure: High-speed broadband is widely available which makes it easy to communicate via video chat. The time difference is relatively low between the UK and Europe and South Africa which means collaboration is quick and easy.
• Good government support: The regulatory environment couldn’t be much more welcoming with plenty of government support and incentives for any company employing a reasonable number of South Africans.
The business proposition for South Africa is multi-dimensional. Average wages are much lower, but skills and expertise are high, which leads to better quality results. South Africa offers much more value than beyond the simple cost of wages. South Africa’s BPO industry is proud to highlight an 18% higher customer satisfaction rating compared with India.
Unsurprisingly, South Africa is becoming more popular as an outsourcing destination across the West. It’s the third most common outsourcing location in the UK and is the fastest-growing destination in the US. It is tied for second among US companies for outsourcing customer experience operations.
Government support
When assessing costs, it’s also worth looking at more than just the average wage in South Africa. The cost/benefits analysis will also be affected by the impact of government incentives.
The BPO industry has been highlighted by authorities in South Africa as being a highly promising source of growth. For South African workers, BPO jobs also offer well-paid job opportunities with excellent opportunities for progression at all levels. As such the government is keen to support development in this field with a range of tax incentives and grants for foreign companies looking to invest in the country.
The range of incentives has promoted further investment and growth in the country which, in turn, is creating further opportunities and promoting a vibrant and competitive market activity.
However, while the regulatory environment couldn’t be much friendlier, foreign companies will have to make sure they understand and adhere to the rules. Employment law can be strict and the authorities are particularly keen to crack down on any activity they perceive as disguised employment – namely trying to frame regular employees as freelance contractors for tax purposes.
Into the future
The current economic outlook in South Africa, therefore, is incredibly favorable to the BPO market. Talent is freely available, and the quality of services is high, but the cost of labor is still significantly discounted compared to the European, US, and Australian markets. All of this makes for an incredibly attractive proposition and has turned business process outsourcing into South Africa’s number one export.
The question is whether this situation will continue. Growth brings prosperity and with it rising wages. As with other countries, South Africa is experiencing a cost of living crisis with domestic budgets coming under increasing pressure. Wages are rising as the workforce becomes more educated, and ambitious and opportunities present themselves.
Inflationary pressures and a competitive working environment will put upward pressure on wages over the coming years with estimates suggesting average wages could rise by around 6% year on year in 2025 and 2026.
Even so, South Africa remains a much cheaper destination than the West and with faster communications breaking down barriers to collaboration working relationships are becoming more cost-effective as well as more practically manageable.
Today and for the foreseeable future, therefore, South Africa retains all the key ingredients that look set to help it remain at the head of the business process outsourcing industry. In doing so it is reshaping the market from one which focused on low costs to one in which almost any job role could be suitable.
South Africa has changed the decision-making process. Previously CEOs in the West felt that the low costs available in places such as India and the Philippines were worth the sacrifice in terms of quality. Now that’s not a choice they have to make. South Africa represents the ultimate no-compromise destination. Although wages will rise it will retain its status as the future of Business Process Outsourcing.
