South Africa’s government has a problem. Although it has done much to improve education levels within the country, unemployment remains stubbornly high at around 30%. With South African companies struggling to pay the wages or match the ambitions of the young generation of workers, more and more people are looking overseas. According to various studies, South Africa’s brain drain is costing the economy billions every year. If the government has any hope of securing long-term, sustainable growth, it has to find a way to stem the flow of talent overseas.
Foreign workers are becoming increasingly important to South Africa’s prospects of economic growth.
One key tool to doing that comes through the business process outsourcing sector. By bringing high-paying international jobs into South Africa’s domestic economy, the government hopes to give young people the opportunities they need at home. Structures such as employer of record (EOR) companies, which facilitate BPO services, can help to lower the cost of entry for foreign companies, create jobs and generate precious new investment into South Africa’s economy.
The brain drain
South Africa’s brain drain is fueled by a host of push and pull factors. High unemployment levels at home make it difficult for young South African workers to find job roles that match their ambitions. Furthermore, international labour shortages in sectors such as healthcare, technology, and engineering mean Western countries are becoming increasingly reliant on foreign labour. Are the baby boom generation approaches retirement, there aren’t enough workers to replace them. The only way to generate further economic growth is to replace these workers through migration. Migrants from South Africa and elsewhere are plugging critical gaps in skills across all sectors, especially health services and IT.
In other words, South African workers need international jobs to help them prosper, and Western countries need migrant workers to generate lasting growth. The key to stopping that brain drain, for the South African government, lies in bringing as many of those international jobs to South Africa as possible through the business process outsourcing industry.
The rise of BPO services
Bringing employment into South Africa works both for the government and for overseas hiring companies. The political climate in the West makes it much more difficult for governments to use migration to build their economies. For all the importance of immigration to economic growth, government policy today is focusing on reducing rather than expanding opportunities for migrant workers.
For those companies that need the skills that migrant workers can bring, the obvious answer lies in business process outsourcing. This is nothing new. Businesses have been offshoring key job functions, such as customer service, for decades. Indian call centres have become a common part of life as companies seek every opportunity to cut back their labour costs.
In a digital and globalised world, though, the BPO sector is changing. Customers demand quality in everything. Customer service is becoming increasingly important in building lasting customer relationships and generating sustainable revenue streams. Those businesses that use BPO services need to do so in a way that helps them build their team, offer value to customers and improve the quality of service.
Hiring in South Africa through EORs
This approach views South Africa not just as a way to reduce labour costs, but as an additional source of talent to complement, rather than replace, existing teams and services. A combination of improving education and high unemployment rates creates opportunities for all parties.
For South African workers, foreign companies can normally pay higher wages and offer better career progression than native domestic companies. Seeing these companies hiring South African employees gives them a chance to access those opportunities without having to move overseas.
Hiring companies, meanwhile, benefit from an environment in which they have the upper hand. Talent is widely available and more affordable than sourcing a domestic workforce. Professionals are every bit as qualified as at home, and digital technology ensures fast and seamless collaboration.
For example, if you’re a small business needing new digital software, finding developers in your local area can be difficult. Competition from other companies and limitations in the local talent pool mean truly talented individuals are hard to find. Those that are available tend to be extremely expensive.
With digital transformation projects typically being high-risk at the best of times, companies have a choice. Either invest large sums of money hiring people for a project which may or may not succeed, or compromise on talent and amplify the risks of failure.
Looking to South Africa means you no longer have to make that choice. You can have your pick of highly qualified professionals who can work closely with your team to deliver the next-generation software packages that can take your business to the next level.
In addition, South Africa’s economy also benefits by creating new high-paying jobs and attracting inward investment.
EORs provide the link that brings all those parties together. They offer a more nuanced and flexible approach than traditional BPO services, giving companies more scope to tailor their teams and choose who they work with. They help ease the transition between hiring contractors on short-term and ad hoc projects towards longer-term employment relationships.
Crucially, they make it cheaper, easier and faster for foreign companies to hire in South Africa. By taking on the role of the employer and all the legal liabilities that come with it, they protect hiring companies from regulatory risk or the need to set up legal entities within South Africa. Everything, therefore, can happen quickly.
Hiring can be done immediately, with companies increasing or reducing their employment needs on an ad hoc basis. Companies that might previously have been deterred by the cost or complexity of expanding into South Africa will benefit from faster and less risky market entry. The chance to build teams using an EOR for an initial period gives you a chance to assess the conditions of the market before committing to long-term investment.
EORs, therefore, serve to lubricate the wheels of inward investment. They break down international barriers, enable cross-border collaboration and unlock inward investment. As this sector continues to evolve, it will become increasingly critical to South Africa’s economic future.
