South Africa’s combination of low costs and high quality has the potential to change the future of outsourcing.
Business process outsourcing is an industry that has come to a crossroads. On the one hand, tightening budgets and profit margins make it more important than ever, but on the other, companies have struggled to contain customer complaints about quality and reliability. In a world in which customers have become increasingly willing to take their business elsewhere, any solution that cuts costs can’t afford to have an impact on quality. It is in this environment that South Africa’s business process outsourcing is thriving.
Outsourcing to South Africa
South Africa’s business process outsourcing sector has experienced remarkable growth over the past decade. It has twice been named BPO destination of the year, and is expected to continue growing at more than 10% year on year between 2024 and 2030. Since 2015, it is thought to have created more than 115,000 jobs and generated revenue of almost $2bn. In an economy struggling to maintain consistent growth, it has been critical to attract jobs and investment from overseas.
Its success is based on a blended offering that combines the benefits of low labour costs with high levels of skill, first-class infrastructure, a friendly regulatory environment, and good language skills.
English is spoken fluently across the country with a clear accent that domestic customers can understand. In addition, multiple European and African languages are widely spoken, making it a great location for customer service and translation roles.
The time zone is a good match with Europe and the Middle East, with the working days more or less overlapping. For other countries such as Australia or the USA, which have a wider difference, South Africa represents a good destination for out-of-hours services, enabling firms to continue offering 24/7 customer support.
Wages are higher than in the lowest cost BPO hubs, but still represent a sizeable discount compared to the UK. Average net salaries in London average out at $4,172.12 compared to just $1,344 .37 per month in Cape Town. The exact ratio varies from job to job and from one city to another, but overall, you can expect to access talent on much more favourable terms than in the UK.
South Africa’s workforce is also highly educated, relatively young, diverse, and ambitious. It is high no potential, but slightly limited in opportunities. For all the efforts to grow the economy, unemployment remains in double digits and is particularly high among young people. The BPO sector is seen by the government as a way to bring in high-paying jobs for its talented workforce. From a hiring company’s perspective, this means the workforce is full of capable individuals and that high-quality talent is both affordable and available. For
companies struggling to find the talent they need in their domestic market at a price that is affordable, this can be a major opportunity to broaden their talent pool.
Technology and the BPO sector
Outsourcing in South Africa is built on technology. The government has invested heavily in developing world-class technology, with super-fast broadband being common across all major cities. BPO companies are backed by state-of-the-art technology, including data management, AI, machine learning, and automation to enable better collaboration and superior insights into business operations.
For example, advanced Enterprise Resource Planning (ERP) platforms can provide in-depth real-time insights into the performance of South African-based teams, allowing you to manage costs, assess performance, and identify problems before they arise. Cloud computing enables real-time collaboration between multi-disciplinary and multi-location teams. Instant messaging and video conferencing allow for seamless and intuitive communication between colleagues. It breaks down barriers and reduces the impact of distance, allowing outsourced teams to supplement rather than replace operations at home.
This new approach to technology has transformed attitudes to outsourcing from a way to minimize costs to a way to access new talent and integrate it with domestic teams. Culturally, the rise of remote work has changed attitudes, with companies now being accustomed to routinely collaborating with professionals in different locations and countries.
This has been a game-changer for hiring companies, giving them a chance to access talent that would not previously have been available.
Outsourcing in the digital age
The major impact of technology has been to change the way outsourcing is viewed and the types of roles that are being outsourced. Previously, companies would have focused on certain basic operations that were traditionally viewed as cost-only exercises, such as back office administration or customer service. These operations are undoubtedly crucial but have not traditionally been associated with driving revenue or strategy.
This new approach to outsourcing casts its eye up the value chain to advanced professions that are core to business growth, such as financial management, software development, or marketing. South Africa’s unique proposition, in which high-quality professionals with a fluent command of English are available at a cut-down price within the working day of hiring companies, means businesses are rethinking their approach to outsourcing. No longer is this a question of simply offshoring certain operations; now it’s one of diversifying recruitment strategies to include an international approach to talent sourcing. Businesses are effectively casting their net a whole lot wider. While previously it might have been restricted to its domestic country or even region, now it can access talent from around the world. This can be a game-changer for businesses and the BPO sector. It’s no longer a question of reducing costs. In the future, it will be about finding talent, opening up new opportunities, streamlining
operations, and broadening the depth of skills in your business. In a demanding high-tech world in which businesses need to incorporate a much wider range of competencies than ever before, outsourcing will move front and centre of business operations.
In this new environment, South Africa represents an ideal outsourcing partner – one which can offer a combination of cost efficiency and quality. As businesses adjust their approach, demand for business process outsourcing and the qualities South African providers offer can be expected to grow rapidly.
