South Africa is fast becoming the go-to outsourcing destination for businesses in the UK and Europe.
In a changing marketplace, attitudes to business process outsourcing are evolving quickly. What was once a cost-cutting exercise is rapidly becoming a core part of business strategy. The emergence of new players in the BPO sector and the influence of new technologies is opening up roles and sectors to outsourcing that were previously off limits. Whether you’re a large corporation or a small and medium-sized enterprise, outsourcing to South Africa can help you get the best out of your workforce, but outsourcing will only really add value if approached in the right way. Here’s how you can ensure your outsourcing journey is profitable and rewarding.
Focus on quality
In the early 2000s, Dell joined the list of major companies outsourcing customer support operations to a third-party organisation in India. However, language barriers led to widespread customer dissatisfaction and a loss of customer loyalty, causing the company to backtrack and bring customer service options back in-house. Other companies experienced similar problems, particularly BT, which in 2015 launched a major publicity campaign promising to have all customer service calls answered within the UK, having experienced widespread complaints from its outsourced call centres.
Both stories are examples of business process outsourcing done thoughtlessly and for the wrong reason. For many companies, such as Dell and BT, the ultra-low cost of labour in India was a no-brainer. English was widely spoken, backed by a robust customer service culture. However, customers found it impossible to understand the thick accents of customer service agents, causing them to seek out alternatives.
However, that doesn’t mean companies should abandon outsourcing. Instead, they need to remember the core principles of quality that helped them build positive relationships with customers. Rather than focusing on lower labour costs, businesses need to consider the entire customer experience.
For example, if you’re looking at customer service, think about the full communication skills of your customer service agents. As the experience of companies that opted for low-cost options in India showed, being proficient in English is not the only consideration. Agents need to be able to communicate clearly.
This is one area in which South Africa has a clear advantage over countries such as India. English is spoken fluently across the country with a clear neutral neutral-sounding accent that can easily be understood by English-speaking customers. In addition, South Africa offers skilled individuals across a wide range of disciplines, making it easier to ensure calls are answered by appropriate professionals. For example, if customers are calling IT support, they need to feel confident that calls are being answered by trained IT staff who can offer expert help.
Think about the entire cost lifecycle.
Saving money has always been the primary consideration for companies choosing business process outsourcing. However, you need to look beyond the simple question of hourly rates. If you do that, then you’ll always end up at the lowest cost solution. In truth, the total cost of outsourcing varies depending on a host of factors, including government support, the quality of service, and compliance issues.
Outsourcing can include hidden costs such as:
•Time zone differences: If your domestic team is working while your outsourced team is offline, you may experience delays and difficulties in collaboration.
•Regulatory risks: Working in a different country carries regulatory compliance risks. Without a full understanding of the regulatory environment, you may be liable to penalties.
•Government support: Favourable government subsidies and grants can lower the overall costs of doing business.
•Quality control: Poor service quality can lead to customer dissatisfaction, reducing the levels of loyalty and customer retention. Keeping hold of existing customers is much cheaper than finding new ones. Poor customer loyalty levels will see costs mount up in the long run.
•Data risks: Countries with a poor track record of security can leave you vulnerable to cybercrime or data breaches.
•Technological infrastructure: Outsourcing partners need to offer state-of-the-art technology to maintain a high level of service quality.
South Africa’s total offering can bring down the total cost of outsourcing to match any other location. Government grants are available for companies looking to outsource to South Africa. These vary depending on the value of the work being outsourced and the number of people you plan to employ.
The country has a robust regulatory environment with data privacy laws that closely follow best-in-class standards set out by Europe’s GDPR framework. Governments’ provisions are strong, and outsourcing providers will offer best-in-class digital infrastructure to make it competitive with any other country.
South Africa is only a couple of hours ahead of GMT, which means the working day lines up very well. This allows for real-time collaboration with assignments being commissioned and completed the same day. Video conferencing technology and instant messaging often mean domestic teams can collaborate with outsourced personnel in real time. From a time perspective, having employees in South Africa needn’t be any different from working with remote employees based in your home country.
Managing outsourced employees in South Africa
As your outsourcing operations in South Africa grow, you need to consider the best ways to manage employees. In the early days, you might be working on an ad hoc basis with South African freelancers. This can be done quickly and efficiently, with payment being arranged for each project individually. However, if you aim to build a team and engage with them regularly, you will need to employ them directly.
Typically, this requires a legal entity within the country, such as a foreign subsidiary, with all the costs and logistical challenges that come with it. Working through a BPO company offers a light-touch approach, with BPO companies offering access to their own pool of workers in return for a fee. However, this can limit you in the type of employees you get to work with.
Outsourcing to third-party employees also loses some of the personal touch. Having your own employees who understand your products and are invested in your company typically leads to better results in the long run.
Using an employer of record company (EOR) can be a good middle ground when hiring South African employees. They offer a greater deal of control over employees, but avoid the need to set up a legal entity within South Africa. The EOR serves as the legal employer of your South African
workers, which means it not only takes care of the admin but also has full legal liability for all your South African-based employees. It’s a low-cost solution that shields you from legal liability and accountability relating to your outsourced employees.
Conclusion
In summary, the business process outsourcing sector is in a constant state of evolution. New technologies are opening up new opportunities and transforming the way companies approach business process outsourcing and the best strategies for success. Whatever your goals when outsourcing services or operations, it’s best to pick locations that can optimise costs without forcing you to sacrifice on quality or customers. South Africa’s special blend of expertise, high-tech infrastructure, and low labour costs makes it an excellent BPO destination.
