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.