Why outsource to Africa? From the strength of the economy to the diversity and depth of the talent pool, South Africa has much to recommend it.
As businesses seek to deal with rising costs and narrowing profit margins, outsourcing has become increasingly popular. In a world of fast global communications, countries such as India have become global outsourcing hubs. However, for those looking for high-quality outsourcing services, South Africa is rapidly becoming one of the go-to options. A combination of a growing economy, skilled workforce and links to Western economies makes it one of the most desirable outsourcing destinations anywhere in the world today. Here are five answers to the question: why outsource to Africa?
1. A strong economy
After Egypt and Nigeria, South Africa is the third largest economy in Africa. Furthermore, it has strong cultural and economic similarities with the West which makes for a seamless link between the two. English is the country’s first language which means there are no barriers to communication – something that has been difficult when it comes to customer service in other popular outsourcing locations such as India or the Philippines.
The country boasts a highly educated and diverse population from a range of different backgrounds. It has an open and multicultural society that is much more open and inclusive for foreign businesses and investors.
Like many countries, it has faced economic headwinds, but the IMF still expects modest economic growth throughout 2024 of 0.9%. Even so, the underlying foundations of the economy are strong with a healthy and welcoming economic environment.
The government also provides plenty of incentives for those companies looking to outsource operations to South Africa. It’s a mutually beneficial arrangement with outsourcing stimulating growth in the country. Outsourcing companies can expect to benefit from subsidised office space, computers and internet connections.
For example, the Global Business Services (GBS) Incentive offers operational expenditure grants in proportion to the number of South Africans each company employs. The South African government has invested heavily to provide incentives to those foreign businesses committed to creating jobs in the country. These incentives mean that the eventual operational expenses of outsourcing to South Africa will eventually be similar to those in the traditional low-cost outsourcing hubs such as India. For those looking to balance the cost versus rewards of outsourcing, this makes South Africa an even more valuable proposition.
2. Value for money
The main reason people choose to outsource is the cost of labour. Although not quite as low-cost a destination as some of the other established outsourcing hubs, South Africa still has plenty going for it. The cost of labour is still below the global average, while a favourable exchange rate against Western currencies means it’s a good way to reduce operational expense.
The exact extent of the savings varies from industry to industry but estimates suggest companies can expect savings of between 50% and 60%. Those savings come without the need to make sacrifices either in the skills or language capabilities of your workers.
Other companies that have outsourced to the lowest-cost destinations such as the Philippines have suffered due to the relative lack of skilled labour and language barriers – particularly in customer-facing roles. A mix of low labour costs and highly skilled labour makes South Africa an extremely cost-effective option in which you don’t necessarily have to sacrifice value for cost.
3. A highly skilled workforce
South Africa boasts all the ingredients needed for a diverse and skilled workforce. The education system has a good track record with the number of people going on to university education rising. According to recent figures from the OECD, 46% of young people between the ages of 15 and 19 are enrolled in general upper secondary education with a further 32% in lower upper secondary education programs. His compares favourably against the OECD average of 37%. The South African government is investing heavily in getting that number up and increasing the number of people, from all backgrounds, who go on to university.
The education system also boasts a strong emphasis on STEM (science, technology, engineering, and mathematics) subjects which means the country is home to a large pool of talented professionals with relevant expertise in engineering, finance and customer services.
English is, of course, widely spoken in South Africa which means communication with overseas clients is smooth and efficient. Customers have become increasingly frustrated with struggling to make themselves understood on company phone lines. Having competent English speakers opens up a wide range of industries which can benefit from South African outsourcing.
Last, but not least, South Africa is a diverse and cosmopolitan country with excellent international links. South African workers will have often interacted with international companies and collaborated with customers and business partners overseas.
Whether delivering customer service through a phone line or working with business contacts, employees in South Africa have no problem making themselves understood or collaborating across borders. In an increasingly global world, driven by connected services, that comfort helps companies work quickly and efficiently with multi-disciplinary teams based all over the world.
4. A convenient strategic location
Location, location, location – so runs the mantra when buying a house, and the same applies to outsourcing. South Africa’s position at the southern tip of Africa, provides a wealth of strategic advantages for companies looking to expand their global footprints. With its coastal location and strong ties to the West, South Africa can be the gateway to the rest of the African continent.
Africa offers a host of business opportunities. It is home to some of the fastest-growing economies in the world, with new markets opening up across the continent. A rising middle class is driving demand for products of all kinds. From South Africa to Morocco, the continent offers multiple exciting market opportunities to businesses of all sizes. All that’s needed is a place to gain a foothold.
Outsourcing to South Africa can be the first step in tapping into this vast market of more than a billion upwardly mobile consumers.
At the same time, South Africa has a well-developed infrastructure good communications a stable political environment with a positive attitude to business. It is a safe and encouraging place for businesses of all kinds to work.
5. Culture and time zone
By leveraging the unique strengths and capabilities of South Africa as an outsourcing destination, companies can unlock new opportunities, expand their market reach, and stay ahead of the curve in an increasingly interconnected world. Whether you are a small start-up or a multinational corporation, South Africa has the potential to be a valuable partner in your quest for business success.
Another reason why so many Western companies favour South Africa is because its culture looks and feels so familiar. South Africa has a diverse and multicultural society that strives to be open and inclusive. The government is highly welcoming to foreign businesses as it strives to bring growth and economic activity into the country. A stable political environment eliminates many of the uncertainties that can exist with other outsourcing hubs. Businesses can expect a safe environment in which to work and stable regulatory conditions.
South Africans themselves are marked by their strong work ethic, professional attitude and willingness to adapt to different challenges. The business culture looks and feels much the same as it would in any other Western country and a familiar legal framework will not require too much adaptation for any business. its working day also makes for a good fit. It’s only a few hours different to Europe which facilitates real-time communication which makes it easier to streamline collaboration.
At the same time, companies outsourcing to South Africa can benefit from extended opening hours. In those areas with a significant time difference, South Africa can help them add 24-hour support to their customers, with a daytime shift in South Africa conveniently covering nights in places such as the US.
Why outsource to South Africa?
To sum up, South Africa provides a compelling opportunity for any company looking to outsource offshore. A skilled workforce, cost-effective operations, compatibility with time zones, cultural links, lack of language barriers and access to other markets offer the perfect combination of cost and reliability. Elsewhere in the world, outsourcing may be linked with a sacrifice in quality, but that’s not the case here. In South Africa, companies can have their cake and eat it – with a highly skilled workforce and the opportunity to cut down on costs. It’s all the benefits of outsourcing without any of the negative.
