South Africa is becoming one of the most popular destinations for business process outsourcing, but what does it really cost?
The business process outsourcing market has changed considerably over the last few years. A competitive market and demanding customers mean companies can’t afford to sacrifice quality to save money. With customers complaining about poor service quality and customer service agents with limited English, companies have had to rethink their outsourcing strategies. Some have abandoned outsourcing altogether and repatriated outsourced business functions back home. For others, though, the search is on for other outsourcing locations which can help them save money without antagonising their customers.
South African outsourcing
For these companies, South Africa represents the perfect solution. Labour costs are significantly lower than in the UK. Just how low depends on the type of work being done and the location. Major hubs such as Cape Town or Johannesburg tend to be more expensive, while up-and-coming locations such as Durban might be a little bit cheaper.
In general, though the average salary is around ZAR 31,058 per month, equating to £1,363.99. By comparison, the average monthly salary in the UK is around £2,800 per month. When hiring staff in South Africa, therefore, you can expect a discount of around 50%.
Wages in places such as India or the Philippines, the two leading global outsourcing hubs, on the other hand, are even lower, which is why many companies continue to offshore jobs to these countries even in the face of mounting opposition from their own customers.
However, South Africa has positioned itself as offering excellent value for money with a reputation based on quality, efficiency and reliability. Where outsourced customer service agents have a reputation for being difficult to understand, South Africa offers fluency in English and an accent people can understand. South Africa’s culture is also a much closer match to Europe, which makes it easier to build lasting relationships with consumers. These, in turn, lead to better customer retention rates and even higher revenue per customer.
A free-flowing customer relationship such as this helps to build more personalised relationships, which in turn can create opportunities to upsell. This gives customers the service they want and offers a tidy boost to your company’s coffers.
Furthermore, wages become much more discounted lower down the food chain. As of March 2025, South Africa’s minimum wage stands at ZAR 28.79, which is less than £2 per hour, far below the equivalent of the UK and making it much more comparable to the lowest cost locations such as India.
When looking at call centre work, often seen as a staple of business process outsourcing, the difference between India and South Africa is not that stark. Average costs of call centre outsourcing could be between $10 and $12 per hour, compared to £6 to $15 per hour according to some recent figures.
When you factor in the potential impact on customer satisfaction, revenue and reputation, therefore, South Africa becomes much more price competitive.
Government support
On top of that, we can also look at potential government support packages. South Africa’s government
has been keen to attract foreign investment through the BPO sector. It offers a range of incentives and grants.
For example, the Business Processes Support Scheme offers grants of between R 37,000 and ~R 60,000 per agent. There is also support available for training and development which is available for all businesses.
Individual regions also have their own programs designed to attract business investment. For example, in Western Cape Province, a business locating call centres for offshore clients can benefit from free internet, voice and data services worth approximately R1.5million for every 200 agents for the first six months.
The BPO sector also benefits by being seen as a priority sector for National Strategic programmes, which opens up other support programmes including skills, training and infrastructure. The South African government has zeroed in on the BPO sector as a way to attract high-paying overseas jobs into the economy.
Talen acquisition
This, in turn, gives foreign businesses an advantage in the job marketplace. For graduates entering the workforce, the arrival of the BPO sector is an opportunity to achieve their career ambitions without having to move away from the country. Foreign companies can generally offer higher wages compared to their South African counterparts, which puts them first in line for top talent.
This can be a further opportunity for small and medium-sized enterprises in the UK, which face a challenging recruitment environment at home. Top talent is being gobbled up by larger and better-funded corporations. Fining people with the skills they need to compete increasingly competitive and tech-driven marketplace can be impossible at home.
Outsourcing to South Africa helps companies to flip the scales and enter a marketplace where they can be at a competitive advantage. South Africa has become excellent at generating high-quality professionals across all industries, but particularly in finance and technology. With unemployment staying stubbornly high at above 30% in South Africa, those talented people are freely available, putting UK-based businesses at a distinct advantage.
Because of this, the type of work being outsourced is changing. It’s no longer reserved for single functions such as admin or call centres. It can be applied to other, more senior positions. Excellent technological infrastructure, coupled with a growing acceptance of remote working cultures, is breaking down the barriers to international collaboration. Companies are recruiting multidisciplinary teams of highly proficient professionals to supplement their domestic teams.
The BPO sector, therefore, is changing. Companies are looking to optimise value rather than minimise spending. When calculating the cost of outsourcing to South Africa, you should examine the entire picture, including the upfront cost of wages, the value to your customers and any government incentives. When these are all taken into account, the cost of outsourcing to South Africa becomes extremely appealing for companies of all sizes. It helps reduce operating costs, access new talent and creates new business opportunities that can drive business operations forward.
