South Africa’s booming outsourcing market is fast becoming the preferred option in locations such as the UK, USA and Europe.
India has long been the number one name in business processing outsourcing, but that’s beginning to change. Evolving market demand and regulatory requirements have seen many companies turning their attention instead to South Africa. A thriving economy, and a highly skilled workforce together with a low cost of labor make the perfect environment for those companies that want to optimize costs without sacrificing quality.
Businesses are voting with their feet. South Africa has surged to the top of outsourcing destinations across multiple industries. For those looking to make the move, here’s how South Africa stacks up against India.
Cost
India earned its reputation as an outsourcing powerhouse thanks to the extremely low cost of labor and despite some growth in the economy, that remains the case. However, the pure cost of labor can be a blunt instrument.
South Africa boasts between 60% and 70% of the costs of major Western economies in Europe, the UK, or the USA, which means it still represents a substantial discount on domestic operations as long as they are of sufficient scale. When you factor in government incentives, the overall costs can be similar to India.
When calculating costs, businesses have also come to consider the impact on their customer relationships and reputations. Customers have been vocal about their dislike of outsourced call centers. A survey from Microsoft revealed that 90% of customers research a business’ customer service reputation and 60% would switch firms due to poor customer service.
Banks such as Lloyds and Santander are among those to have relocated away from India due to customer dissatisfaction.
Economy and infrastructure
South Africa’s economy is growing steadily helped by a highly diverse and educated workforce and a pro-growth government. According to Deloitte, the economy is predicted to grow by 1.6 in 2025, 1.8% in 2026, and 2.5% in 2027 and inflation is expected to remain under control.
South Africa has also navigated its way out of COVID-19 better than most. While lockdowns imposed disruption on economies around the world, South Africa transitioned successfully to a remote working model which enabled key services to continue.
India’s economy by contrast has been slowing sharply over the past few years plagued by weak manufacturing results.
South Africa, meanwhile, boasts excellent IT infrastructure with high-speed broadband being rolled out across the metropolitan areas. In India, though, it’s still a work in progress. Although internet adoption is on the rise, coverage can be patchy and more than half of internet users are battling speed