South Africa’s thriving business process outsourcing market offers businesses the chance to save money without sacrificing quality.
With business costs rising and competition becoming increasingly intense, the pressure is on for companies to save money without cutting corners. In such an environment, a smart business process outsourcing strategy can be critical to business performance. However, many businesses have only scratched the surface of what BPO can offer. The emergence of countries such as South Africa means outsourcing can sit right at the forefront of business processes. Here’s how outsourcing to South Africa can save money while putting you in pole position to compete.
Lower labour costs
Wages in South Africa are typically between 50% and 70% the level in the UK. The average monthly wage in South Africa is around R28,000, which equates to around £1,200. In the UK, it’s likely to be around£31,00 before tax.
South Africa’s minimum wage is around £1.20 per hour compared to the UK’s £11.50, which means that for low-skilled labour, the average wages are much lower than in the UK.
For more senior and technical roles such as software development, the comparison is a little closer, with a difference of around 50%.
Within that, wages can vary from one part of the country to another, with labour costs likely to drop considerably away from the major cities. Bloemfontein is generally considered to be one of the cheaper major cities, with average wages of around R270,050 per year, while Johannesburg wages are around R447,857 per year.
The difference indicates the spread of senior and professional roles, as well as marked differences in the cost of living from one city to another.
Regional grants and tax incentives are also often available for businesses that locate in areas beyond the main hub that might suffer from low levels of employment. For example, the Eastern Cape has a Job Stimulus Fund, which aims to support investment in economically weak areas or those zones with high levels of deprivation.
The choice of location, therefore, can significantly impact the final cost analysis of outsourcing to South Africa. If you can find a city with low wages, but with the technological infrastructure and support you need for your business process, this is a chance to drive down the overall cost of doing business considerably.
When choosing the city to base yourself, think about what infrastructure can already be found in the city and if it’s enough to meet your operational goals. Do your research and identify any government-run incentive schemes that your business may qualify for.
Talent optimisation
South Africa’s relatively affordable labour market, combined with an increasingly talented and diverse talent pool, helps you maximise the value of talent acquisition.
In an increasingly competitive business environment, finding people with the talent you need can be expensive and difficult. This can also increase your overall costs by causing process delays and lengthening your time to market when benchmarked against your key competitors.
The key to South Africa’s growing economy is the strength of its workforce. A higher proportion of students are graduating with degree-level qualifications than ever before. The government has invested in professional education, getting people with focused professional qualifications to pursue the careers of their choice. What they don’t have yet are enough business opportunities to meet their needs,
South Africa’s government is keen to avoid the brain drain that has plagued developing countries. With an increasingly ambitious and highly qualified workforce struggling to find opportunities in their home market, the temptation will always be to move overseas in a bid to further their careers.
International companies are also turning their attention to South Africa, looking for promising but affordable talent. The business process outsourcing sector represents an opportunity to bring those overseas jobs into the South African economy and give the next generation of professionals the opportunities they want at home.
Accessing South African talent is becoming easier thanks to the rise of digital communication tools, such as video conferencing, instant messaging and the cloud. UK businesses can now quickly engage and collaborate with South African professionals on a wide range of business projects.
We are in an age of remote work. UK businesses are used to their employees working from home or even overseas. Through platforms such as Zoom and Teams, you can now instantly communicate with multidisciplinary teams covering several countries at once. International borders no longer need to pose any barrier to professional collaboration. Indeed, some businesses are installing high-tech video walls which allow people to communicate face-to-face with their colleagues in different countries.
Hiring employees in South Africa
Finally, the overall cost of hiring people in South Africa is falling thanks to the rise of third-party organisations such as employers of record, who offer a first and affordable way to hire and manage talent.
Traditionally, businesses would have faced a sticky choice when outsourcing. Either they set up a business entity to hire people directly, or they make do with the somewhat limited option of working through a business process outsourcing company.
The latter is simple and affordable, but gives you no control over the people you hire. The outsourcing company simply assigns its own employees to your company based on their schedule. You get no say on the people who are hired, and it’s difficult for them to build up an in-depth understanding of your company.
The former option allows you to tailor your own team to your desire. You can train them to fully understand your business and provide a more comprehensive and informed service to your customers. However, employing them directly means you have to set up a foreign subsidiary, which comes at a considerable up-front cost.
Working through an intermediary, such as an EOR, gives you more of a say over who you hire while helping you to control costs. The EOR is the legal employer of your workers. There is no need to set up a subsidiary. You can simply pay a fee to the EOR, allowing you to scale your team up or down depending on your business needs.
All in all, outsourcing to South Africa offers both savings and value. It offers the best of all worlds by saving money on labour without adversely affecting the end output or the customer experience. In a business world governed by fine margins, outsourcing can optimise costs and give your business all
the tools it needs for success.
