South Africa and the Philippines are two of the most popular BPO destinations, but which one is best for your business?
As the world becomes more globalized the stage is set for renewed growth in the Business Process Outsourcing (BPO) industry. Faster communications are breaking down borders and reducing the importance of location. Outsourcing gives businesses the chance to access low-cost workers, broaden their talent pool, access new markets, and much more.
Traditionally the Philippines has been one of the most popular outsourcing destinations, but in recent years it has been challenged by the up-and-coming South Africa. Businesses are adopting a more nuanced approach to outsourcing – one driven by quality as much as value. When deciding on the best BPO solution for you and your business, you should take in a range of different factors.
Cost
Winner: The Philippines is normally marginally cheaper but the final calculation can be complicated.
When it comes to the bottom line the Philippines just about edges it in most situations. South Africa is highly price competitive. Its cities are some of the cheapest in the world which means its workers can afford discounted wages compared with most other locations around the world. However, the Philippines is still slightly cheaper in most instances than South Africa.
Even so, costs can vary across both countries depending on the type of role being outsourced and the destination of the employees.
South Africa also benefits from extensive government support in the form of tax breaks and grants. The level of support rises with the number of employees, so in some cases employing people in South Africa can be more cost-effective.
If cost is your overriding consideration it pays to run a comprehensive cost/benefit analysis to work out the real comparative cost of labor considering all government support available.
Language skills
Winner: South Africa
Both countries score well on this one. The Philippines is known for its language skills with English being widely spoken. However, it is not the first language which means there will always be something of a barrier between customers and call centre agents. Misunderstandings may be unavoidable leading to poor service, delays, and potentially lost income.
Furthermore, customers have reacted negatively to companies that have outsourced certain
functions, especially customer-facing roles to non-English speaking countries. More and more customers are prioritizing customer service levels and have shown a willingness to ditch companies that they feel are letting them down.
In South Africa, on the other hand, the majority of the population have excellent English and will speak with neutral clear accents that can easily be understood. Because English is a first language to many people it’s easier to communicate in a natural way that engages customers more deeply leading to higher levels of customer satisfaction, retention, and a higher revenue per call.
Quality assurance
Winner: South Africa
South Africa has placed a commitment to professional customer service operations front and center of its BPO strategy. The emphasis is on high standards of training and accountability at all levels.
Outsourcing providers work to meet international best practice standards in everything they do especially when it comes to handling the personal data of customers. The Philippines on the other hand has a reputation for poor governance which has been associated with higher levels of corruption and fraud. In some cases, outsourcing in the Philippines has been associated with hidden charges or instances of overcharging. The sector lacks the transparency and maturity of South Africa which can make it more difficult to establish trust and accountability.
Business culture
Winner: South Africa
South Africa shares many cultural norms with Western economies and partners. The vast majority of the population is multicultural and shares attitudes and perspectives with customers in Western countries. They share many of the same cultural references which makes it easier to develop a positive working relationship with customers which can enhance revenue opportunities and deepen customer relationships. The South African accent is more familiar which will lessen the feeling of separation customers feel when speaking to a foreign call centre agent.
Government support
Winner: A tie. Each company offers generous support options and incentives.
A big factor in determining the overall cost of BPO operations will be the level of customer support available. Both companies see the BPO sector as being crucial for their economic success.
South Africa offers a host of incentives, tax breaks, and grants to companies that create jobs in the country and so too does the Philippines. Both are actively seeking to encourage companies from all over the world to outsource operations to the country.
How valuable these incentives are will depend on your particular outsourcing destination. If you’re struggling to choose between the two it pays to do extensive research and compare what support and incentives might come your way.
Workforce
Winner: South Africa
Broadening the talent pool is seen as an increasingly important factor when choosing to outsource and this is where South Africa has a clear advantage with a broader, deeper, and better-educated workforce. University education is high and growing and the workforce is full of highly qualified professionals across a wide range of disciplines.
This means South Africa can offer services that stretch beyond the traditional boundaries of outsourced operations. Businesses are looking towards South Africa to outsource everything from customer services jobs to marketing, IT support, financial services, and others.
Advances in technology are making it easier than ever to collaborate which means services can be delivered easily with minimal delay or disruption.
Technological infrastructure
Winner: South Africa
There is a clear winner with this one. South Africa has a mature diverse market with excellent technical infrastructure. Internet connectivity is highly advanced and the country can offer a host of innovative technological platforms to outsourcing clients.
The Philippines on the other hand could best be described as a work in progress. However, things are changing. The government is investing millions into delivering high-speed broadband connectivity across the country including rural areas. The digital economy is growing at more than 11% per year. Even so, it is still playing catch up and the penetration of digital technology can still be variable across the country.
Making the choice
Both South Africa and the Philippines represent two of the most attractive BPO destinations in the world. The BPO sector represents a major proportion of their respective economies and is seen as being crucial to each government’s economic strategies.
Each country has its strengths and weaknesses. Which one is best will depend on your business, your goals, and how you’ll be judging success. What is important is that you adopt a three-dimensional approach to your decision that considers all factors.
In the past, companies have focused wholly on cost which has seen the Philippines stretch ahead alongside India at the head of the market. However, low costs met with friction from customers, especially in customer-facing roles.
More recently businesses have adopted a more nuanced approach which factors in the full value proposition of any outsourcing destination including the skills of the workforce, regulatory environment, technological infrastructure, and the range of skills available.
This approach sees costs as being one among many considerations and is driven by changing attitudes and customer demand which places a greater emphasis on customer service. As such South Africa’s BPO sector has grown dramatically over the past few years and is now overtaking the Philippines and rivaling the traditional market leader, India. As a location, it is much more in tune with the sensibilities and requirements of today’s modern business landscape. Whatever the sector, therefore, it may be worth giving South Africa serious consideration.
