South Africa is fast rivalling India as a leading outsourcing location for UK and European Businesses. Here’s what’s driving the change.
South Africa is being hyped as the new hub for business process outsourcing. To achieve that, though, it has to fully unseat the traditional BPO powerhouses such as India and the Philippines. Businesses have copped a fair amount of flak for outsourcing business operations to these countries over the years, but with business costs on the rise, and the economy looking increasingly certain, India’s low-wage economy still attracts companies willing to cope with the negative publicity.
For all the excitement about South Africa, it can’t match the dollar per hour wage levels found in India. So, if you’re considering using business process outsourcing, which should you choose – the low-cost option of India or a more nuanced approach to outsourcing in South Africa.
The answer to that question, as they say is complicated.
Cost versus quality
Much of the talk about outsourcing in South Africa likens the choice between a cut price off brand product in Lidl and a reasonably priced, but high quality offering from the mainstream supermarket.
If you chose the latter you might pay a little more but the end quality will be much more reliable. However, the reality is a little more nuanced.
Certainly South Africa has made much of its quality offering, pointing to stats that show improved customer satisfaction levels compared to India. The government has laid the foundations for a thriving BPO market with friendly regulation and a robust technological and governance infrastructure. The message is clear – come to South Africa and you’ll save money without letting your customers down.
Indian outsources also push this line relying on the idea that when push comes to shove nobody will be able to beat them on the bottom line. The country is aso supplementing that by pointing to its highly qualified staff, and rapidly growing technological infrastructure.
In reality, the lines can be blurred. South Africa’s government in particular has focuse on the BPO sector as being a key tool for growth. It has set up a host of incentives through grants and tax credits to tempty foreign companies into the South African market. Those businesses that create a reasonable number of well paying high quality jobs will be rewarced with national and regional level grants.
Easrlier in the year, the government announced a rat of incentives aimed at the outsourcing sector with extended grants and support packages designed to position South Africa as a key global hub for the BPO industry. Special Economic Zones provide enhanced support for businesses in key regional areas.
Taking these support packages into account sheds a very different light on how much ROI you might expect when outsourcing to South Africa. In some cases, the overall cost may not be very different to outsourcing to India.
In general, therefore, India might be expected to beat South Africa purely on price, but the true calculation may vary depending on the specific situation.
Language skills
The most obvious difference, especially when it comes to customer facing roles is in the respective
language skills. When outsourcing operations to India, companies have sparked customer complaints due to language barriers. Although English is widely spoken across India, it is still a second language and people generally speak it with a heavy accent that can be difficult for some people to understand. These problems lead to miscommunication, mounting frustrations and a lack of trust in the company.
South Africa, on the other hand, has English as one of its official language. It was spoken wide and fluently across the country in a clear, neutral accent that customers in the UK find much easier to understand.
The cultural similarities between the UK and South Africa can also make it easier for customer service reps to engage with customers during calls. This leads to better customer satisfaction and improved retention which in turn leads to higher overall revenues.
Security
In recent years, the reputation of the BPO sector has taken a hit thanks to rising levels of cyber crime and BPO fraud. India, has been a particular target with cyber criminals using the country as a base to target customers in the UK.
With any BPO operation data protection can be critical with sensitive customer information passing from one country to another and traversing different data protection regulatory regimes.
South Africa has made security a top priority from a technical, regulatory and practical standpoint. Its data protection laws mirror best-in-class examples such as GDPR, which means there should be no friction when moving data from one jurisdiction to another.
The government has imposed strong governance requirements with punitive action being taken against cyber criminals and those companies that fail to implement effective protections for company data. South Africa has gone out of its way to create a safe and secure pipeline for all outsourcing operations.
Talent acquisition
Both India and South Africa are becoming popular sources for talent acquisition. Both have seen university attendance rise and boast ambitious and talented workforces with plenty of highly qualified professionals ready to provide services across all business operations. Freelancers from both countries are regularly working with clients in Europe, the UK and the USA providing high-quality but affordable business solutions.
They are fertile territories for small and medium sized enterprises in the UK looking to build multidisciplinary teams and level the skills gap with larger competitors. The ability to access affordable, but highly capable professionals is critical in helping businesses remain competitive.
South Africa, though, probably has a distinct advantage due to its time zone. With only a couple of hours difference it’s much easier to collaborate with professionals with professionals in real time. You can provide feedback on work done and get revisions returned within the same working day.
Outsourcing in South Africa or India
All in all both India and South Africa will continue to have a major role in the BPO sector for years to come. However, they serve slightly different roles. India has a highly mature and robust infrastructure for outsourcing and a lengthy track record of delivering highly affordable services. However, it has attracted negative publicity due to concerns over security and quality.
South Africa offers a more blended offering with the ability to work with highly skilled professionals
at all levels. With a robust infrastructure and a clear focus on quality it offers a combination of low cost, high quality and value for money. In doing so it is changing the narrative around the BPO sector and expanding the range of companies that can be involved with it.
