Companies in the UK are turning to employers of record to help manage business process outsourcing strategies in South Africa.
The Business Process Outsourcing (BPO) sector is experiencing something of a renaissance. Having seen businesses moving away from the concept in the face of customer complaints, economic necessities are causing companies to reconsider. However, this new era of BPO works somewhat differently from the past. Today, the emphasis is on workforce optimisation rather than simply saving costs. As ever, businesses are still keen to benefit from lower labour costs, but they don’t want that to harm customer relationships.
They want countries that can offer a combination of low costs and high quality. These demands are encouraging businesses to move away from the BPO powerhouses of India and the Philippines in favour of alternative destinations such as South Africa. The way in which businesses work with outsourced employees is also changing rapidly. The traditional BPO operations in which businesses outsourced single functions, such as customer service, are making way for more flexible options, such as employers of record (EOR). If you’re keen to outsource to South Africa, EORs offer a flexible, low-cost option that allows you to quickly and safely hire multidisciplinary teams in South Africa.
What are EORs
The role of an employer of record is to act as the legal employer in the country. It has full legal responsibility for employees. It pays their wages, manages PAYE, pays taxes and files all reports to the relevant authorities. All you have to do is pay the EOR fees and make sure the employees have plenty of work to keep them busy.
They work differently from BPO companies, which tend to take over entire job functions – such as call centre, or customer support – with their own ready-made employees. As the hiring company, you don’t get much of a say about who works with you. They will simply be trained up on your product or service and instructed on how to manage customer queries. These companies deliver services as a single package. It’s convenient, affordable, but not very flexible. For those businesses that want more control over the employment process, the flexibility of an EOR can be beneficial.
An EOR is not restricted to a single job function. It can help you build up a diverse team offering a wide range of skills to your company. It caters to changing demand in the BPO sector with companies looking to outsource a wider range of skilled and, in some cases, senior business to third countries. The goal is not just to hire talent cheaply, but to ensure the people delivering the service meet the high standards that have helped your company be successful. The goal is to minimise costs without alienating customers.
Outsourcing to South Africa
Fear of alienating those customers is what’s driving businesses to move away from traditional BPO hubs such as India and the Philippines in search of new options. Compared to India, wages in South Africa are relatively high, but South Africa has several advantages that make it more suitable for the modern approach to outsourcing, including:
•Language skills: English is spoken fluently across the country in a clear accent that customers can understand. For client-facing roles such as customer service or call centres, South African agents are less likely to experience the communication difficulties that have plagued outsourced operations in the past. Firms such as BT had to quickly backtrack on call centre outsourcing in the face of severe criticism from their customers.
•Time zone: South Africa is only a couple of hours away from the UK in terms of time. Collaboration can be quick, simple and in real time.
•Technology: South Africa has invested heavily in its technological infrastructure. Outsourcing services come backed with the latest technologies such as AI, ML and the cloud. Internet connections are as fast as anywhere else in the world, making for fast and efficient communication.
•Regulatory alignment: Governance standards and regulatory provisions closely follow international standards, especially in mission-critical areas such as data protection.
South Africa offers the benefit of a growing economy, a stable environment and excellent infrastructure, together with affordable labour costs. With a diverse and highly skilled workforce, it shifts the narrative on business process outsourcing, where quality and affordability go hand in hand.
As a result, the type of roles being outsourced is changing. Businesses are moving from single functions to diverse teams in which multiple professionals from different backgrounds work independently in much the same way as a regular employee. Rather than having a pre-packaged service offering, businesses get high-quality employees bringing the benefits of their experience and expertise. It’s a more fluid working experience which, from a practical perspective, may look indistinguishable from conventional employment.
This more flexible approach is encouraging businesses to outsource a much wider range of job functions, including skilled roles such as software development, marketing or financial planning. Working with an EOR gives you the chance to build a multi-disciplinary team with the individuals and skills you want without the added costs of setting up a foreign subsidiary. Without that, any cost savings achieved from working with cheaper employees would be negated.
An employer of record, therefore, gives you the chance to work with people as if they were full-time employees. They help you manage an expansion into South Africa’s lucrative market without the added risk and expense of setting up a full domestic operation and registering a legal subsidiary. They can also help you find professionals who might be unavailable or unaffordable in your domestic market, reduce costs in certain areas of your business, and diversify your workforce. With superfast internet communications being the norm across South Africa, you can quickly set up a foreign-based team capable of working closely with your domestic operations. It’s a new approach to outsourcing which seeks to supplement rather than necessarily replace workers in the UK.
At a time when all businesses are struggling with rising costs and finding top talent, using an EOR to outsource to South Africa can help you address both challenges. It can reduce your labour costs in some areas and give you access to people with the skills and experience needed to help your business thrive.
