Choosing where to outsource operations depends on your sector, the local economy and talent pools.
South Africa’s diverse and emerging economy is attracting attention for businesses looking to outsource operations. However, the real value of this experience will vary considerably depending on your choice of outsourcing city. South Africa’s economic and talent landscape can vary significantly from one city to another. With some towns having generous incentives designed to attract foreign investment, carefully choosing your city could give you optimal value for money.
Why outsource to South Africa
The main reason to outsource to South Africa is the same as ever – money. Although wages are higher than in some of the biggest outsourcing hubs such as the Philippines, they still offer sizeable discounts compared to the UK. Generally speaking, companies can source high-level professionals at around 50% of the cost in the UK. Lower-skilled jobs can attract even higher savings.
Key to South Africa’s success has been its commitment to quality. The sector has been keen to promote itself as a high-value alternative to the bargain basement offerings in India or the Philippines.
With English being widely spoken across South Africa in an easily understood accent, customers report fewer problems engaging with customer service representatives.
Excellent technical infrastructure enables fast and seamless communication between domestic and outsourced teams.
Strong governance provisions, including a robust regulatory environment and excellent cybersecurity provisions, provide reassurance to businesses and their end customers that sensitive data will be safe and secure. South Africa’s data protection rules closely mirror leading global regulations, such as GDPR, enabling the smooth and fast flow of data to and from South Africa.
This reputation for quality has not only seen businesses switch to South Africa for traditional outsourcing services such as call centres, but also more high-value roles such as finance, legal or technical support. South Africa has earned a particularly strong reputation for financial services and has become a key financial hub for Africa.
The education system has improved immensely over the past few years, with rising rates of people graduating with degree-level or professional qualifications. As a result, the country benefits from a young, diverse and upwardly mobile workforce eager for new opportunities. Traditionally, these new workers would have had to move overseas in order to access the higher pay on offer from overseas companies. The business process outsourcing sector promises to bring those high-paying jobs back into its domestic market.
The government has also hit upon the BPO sector as a key driver of growth and opportunity. Companies promising to create jobs within South Africa can benefit from a host of incentives and grants, which can further improve the ROI of relocating to South Africa.
In short, South Africa offers an outstanding outsourcing location for many reasons:
•Wages are much lower than in the West.
•The workforce is highly skilled with professionals available at all levels.
•Technological infrastructure is strong.
•Regulations are favourable governance is robust.
South Africa is changing the landscape of the BPO sector both in the type of services being outsourced and the motivation behind hiring companies.
The best places to outsource in South Africa
Once you’ve decided to outsource to South Africa, though, the next obvious question is where. The answer to that will depend on the types of work you want to outsource, your budgets and local regulations.
Three cities in particular have forged reputations within the BPO sector. Cape Town is often viewed as the main outsourcing hub in South Africa, with a particular focus on customer experience and contact centres. It boasts a large, English-speaking workforce with a neutral accent, making it a popular destination for clients in the UK, USA or Australia. Labour costs are much lower than onshore hiring, and it offers strong infrastructure with fast digital communications and government support. As with many cities in South Africa, unemployment is high, which means talent is freely available.
As a recognised premium location, Cape Town benefits from outstanding infrastructure, but operating costs might be higher than in other areas of South Africa.
Johannesburg, meanwhile, is a major financial hub in South Africa and is strong in areas such as financial management, accountancy, reporting, legal support and HR. Its local economy is thriving and is perfect for building highly qualified multisciplinary teams to support your domestic workforce.
Durban, meanwhile, is seen as more of an up-and-coming outsourcing hub. Its workforce is young and talented, and it offers in best-in-class technological infrastructure. The cost of living is lower than in the other major commercial hubs, which makes it a good option for companies looking to access talent on a more affordable basis. It is particularly popular with companies looking for multilingual contact centres, back office support and inbound call centres. However, the BPO sector is also slightly less developed, which may create challenges for more high-end clients and contact centres.
Regional support
Different regions of South Africa may also come with their own government incentive schemes designed to encourage investment in the area. The South African government also offers additional support for foreign companies looking to create jobs in areas with high levels of unemployment. The intention is to spread the wealth generated by the BPO sector and generate development across the country, as well as the major economic hubs.
Depending on the nature of your business operations, these regional support schemes and networks can significantly increase the value proposition of relocating to the area. When making the decision, companies should look at the available talent and support infrastructure to determine if the location can meet their needs in terms of value for money, infrastructure, reliability and the quality of talent.
By doing your research and seeking to understand the nuances of local economies, businesses can optimise their outsourcing strategies while also playing an important role in the country’s economic development. It’s a win/win for all parties, with overseas companies creating much-needed economic activity while enabling hiring companies to source high-quality but affordable talent.
