Insurance companies are turning to South Africa as an outsourcing hub, offering value for money with state-of-the-art quality.
Insurance companies face a difficult and uncertain economic environment. Profit margins are shrinking and costs are rising. Customers, already stretched by the cost-of-living crisis, will struggle to afford substantial hikes on their premiums. At the same time, technology is changing the game, and companies are putting a growing emphasis on customer experiences. In other words, insurance firms are looking for ways to save money while still offering their customers in best-in-class services. It’s a tough calculation to crack.
Changing attitudes to outsourcing
Traditionally, many back office operations were viewed as simple costs – and for some companies, that remains the case. Call centres and customer support options were limited, with some firms looking to cut costs by outsourcing key functions of their customer experience operations to overseas locations such as India or the Philippines. Companies such as AXA, Aviva, Alliance, and Zurich outsourced operations such as business processes, data analytics, claims administration, and customer service to low-cost destinations to save on Labour.
However, the experiences were mixed, especially for key front-line operations such as customer service. Quality levels dropped noticeably, and heavy accents made it difficult for customers to understand the information being given to them. Poor technological infrastructure and rising instances of BPO fraud also raised data protection concerns.
Aviva, for example, faced particularly strong backlash from its customers after moving thousands of jobs from its base in Norwich to India, with customers highlighting concerns over data protection and service quality. The company eventually backtracked and moved jobs back to the UK and emphasized improved risk management processes. AXA, Prudential, and Standard Life all experienced similar complaints when shifting operations to low-cost third countries.
Customer attitudes to outsourcing began to fray. However, insurance companies have found a surprising alternative in South Africa with a combination of good English skills, a wide depth of talent, and state-of-the-art technological infrastructure.
Outsourcing in South Africa
South Africa’s outsourcing proposition is very different from India’s. While cost is a primary driving force with labour in South Africa being around half the cost of Western economies such as the UK, that’s only part of the story. South Africa has invested millions into its economy and technological infrastructure. The result has been the development of powerful business process outsourcing hubs powered by the latest technologies such as data analytics, AI, cloud computing, and superfast broadband.
Education levels have improved with more people than ever graduating from university. As a result, the workforce is young, diverse, multi-talented, and ambitious for opportunities. However, unemployment levels remain stubbornly high, which means there is a host of talented people looking for opportunities.
To keep that talent in the country, the South African government has turned to the business process outsourcing industry. It has become one of the main sources of employment in South Africa and foreign investment.
For overseas companies, South Africa offers an exciting proposition for multiple reasons:
•Cost of labour is higher than in places such as India, but is still a major discount on locations such as the UK.
•Government support is generous with grants and tax credits on offer to companies that generate jobs in the country.
•English is widely spoken across the country. Unlike in India, though, the accent is clear, neutral, and easily understood by customers in the UK.
•South Africa’s culture retains many similarities with Western and European counterparts, which helps customer service agents build relationships.
•A highly skilled workforce is backed by the latest technology, offering instant communications, data analytics, and AI.
•South Africa is only a few hours different, which makes it a good time zone match.
The power of technology
In a digitally driven society, policyholders are becoming more demanding and tech-savvy than ever. South Africa’s outsourcing hubs come backed with the latest technologies, including cloud computing and customer data analytics, offering all the insights you’d expect from a domestically based team. AI analytics can help customer service operators provide real-time hyper-personalised and omnichannel customer service options for all customers.
Video conferencing allows instant communication, which enables you to collaborate with South African-based workers in much the same way as you can with your domestic team. It is now becoming common practice for companies to collaborate with multi-disciplinary teams based all over the world.
That technology, coupled with the range of skills on offer, is driving outsourcing beyond basic back office or customer service functions, including claims management and risk assessment. The range of skills and the technological capabilities of South African BPO companies are reshaping the entire concept of business process outsourcing and why companies seek to offshore certain functions.
Outsourcing in the future
As the range of job functions being outsourced grows, so too does the way in which companies in the UK and elsewhere work with their outsourced teams. While previously these might have been siloed away or hired and contracted through BPO companies, hiring companies now demand a much more collaborative interaction.
South African-based teams can work intuitively with those based in the UK – their skills supplementing rather than necessarily replacing UK-based job roles. Communication can be fast and efficient via video conferencing or instant messaging. Cloud computing allows teams of people to collaborate simultaneously on the same documents wherever they are based in the world.
Enabling this more fluid and intuitive form of collaboration requires a different type of support organisation from the one-dimensional BPO approach. A direct employment model offers full control over the hiring, firing, and management of the employees, but it can be slow and expensive to set up. Before you hire any South African employees, you’ll need a legal entity in the country in the form of a subsidiary. This takes time, costs money, and requires hiring support staff to handle the administration, legal, and taxation obligations of the employment process.
An Employer of Record handles all that for you. It takes on legal responsibility for the entire employment process and offers you full legal protection. All you have to do is pay the fees, set up the working relationship, and you’ll be ready to go. It’s fast, easy, safe, and convenient.
EORs will also often offer additional support in the recruitment process, which gives you more control over the sourcing and selection of candidates. It helps you shape a team around your requirements and to work with them as if they were part of your existing team.
Other options are also available, such as professional employers organisations or agents of record. Which option you choose will depend on the specific working relationship sought, such as whether it’s freelance or full-time time or if you already have a legal entity.
Building insurance teams
South Africa has positioned itself to be a very different kind of outsourcing destination – one that is perfectly adapted to the needs of finance and the insurance industries. Its talented workforce offers services at all levels from customer service to claims management and beyond. With labour costs being a fraction of levels in the UK, it’s a great way to minimise your spend while also accessing in-demand job functions. As South Africa’s economy continues to develop, its workforce is constantly expanding, making it an even more tempting proposition for hiring companies in the UK.
