More businesses than ever are looking to outsource business operations to South Africa – here’s why.
The concept of business process outsourcing is changing. What was once simply a tool to reduce operational overheads is now becoming a core plank of strategic planning. Driven by an increasingly competitive business landscape and client demands, the value proposition for outsourcing is evolving. Businesses are looking to do more than simply save money. They are looking to expand their talent pool, push forward into new territories and deliver value for their end user.
These evolving needs have seen them shift attention away from the traditional BPO powerhouses of India or the Philippines to those locations that can offer true blended value. All of which means outsourcing in South Africa is becoming an increasingly popular option.
The rise of outsourcing in South Africa
South Africa’s rise as an outsourcing hub has been nothing short of meteoric. The past decade has seen double-digit growth year on year, with more of the same expected in the run-up to 2030. The country has twice been named the BPO outsourcing destination of the year and has attracted interest from businesses of all sizes.
The government has ramped up support with a range of grants and incentives at the regional and national levels to encourage foreign players into the market. The BPO sector has created thousands of jobs in the past few years and is seen as a key tool to provide South Africa’s ambitious but under-employed young workforce with the opportunities they crave.
South Africa has done much to improve its education system, with more graduates entering the workforce than ever before. The country now has qualified and experienced professionals across all industries. However, the employment market has struggled to keep up. Unemployment rates remain around 10% and are especially high among those qualified young workers.
As with many countries in Africa, South Africa’s biggest fear is a brain drain of talent as upwardly mobile professionals seek out richer opportunities overseas. The government has been successful in training up its workforce, but work still needs to be done to keep them within the South African economy.
A growing and increasingly diverse BPO sector is key to providing those opportunities. As investment has flooded into the country, jobs are opening up across the board, even within those which were previously not considered targets for outsourcing.
The changing nature of outsourcing
South Africa’s emergence has been helped by evolving technology. The rise of cloud computing and video conferencing software enables instant, free and uninterrupted communication from one country to another.
Today, you can easily have face-to-face conversations with contacts on the other side of the world. Documents can be shared online and simultaneously edited by multiple stakeholders. The world is shrinking again. Distance is no longer the barrier it once was. Companies have quickly become comfortable collaborating with multi-disciplinary teams across many different locations.
What this means in practice is that companies can now outsource a much wider range of business functions. Rather than just admin or customer service solutions, it is now possible to access talent across the spectrum.
Although customer support remains a mainstay of the BPO sector, South Africa has been particularly strong in other sectors such as technology, finance, marketing and legal support. Overseas businesses often start by working on an ad-hoc basis with locally based freelancers before scaling up into more regular and formalised arrangements.
South Africa’s technological infrastructure has evolved rapidly to keep pace with internet connections becoming faster and more sophisticated. Most major cities now have superfast broadband as standard, facilitating fast and easy communication between locally based teams.
Economic developments
South Africa has also been helped by socio-economic developments in countries such as the UK. Rising costs, tightening profit margins and an increasingly competitive labour market mean many businesses – particularly smaller and more independent firms – are struggling to access people with the talent they need to grow.
Technology is a perfect case in point. Businesses of all sizes are enacting digital transformation projects. However, to do this successfully takes talented people. Talented software developers are in high demand, with professionals being able to command high prices. The best talent is quickly snapped up by the biggest companies, leaving smaller competitors struggling to keep up.
Rising labour costs add to the burden of companies, leaving them struggling to find savings elsewhere.
Looking to a country such as South Africa is a great way to access top talent at a price that’s more affordable for SMEs. South Africa has a healthy reserve of tech talent, from IT support to web design and software development.
With labour costs typically being half the level in the UK and Europe, this is a golden opportunity to access top-notch professionals at a fraction of the price you might encounter back home.
A commitment to quality
The ability to meet those recruitment needs hinges on South Africa’s ability to provide value for money to the end users. The BPO industry has long suffered from a poor reputation for quality. Complaints about poor levels of customer service, lower quality levels and cybersecurity concerns meant that the traditional BPO model inherently traded off quality for lower costs.
Such a trade-off is no longer acceptable to customers who have forced companies that have adopted outsourcing to rethink their strategies.
South Africa’s outsourcing sector has put quality front and centre of its business offering. It offers highly skilled professionals with an excellent command of English, with a time zone which matches up well with Europe. Tech infrastructure can compete with the rest of the world, and strong governance procedures, particularly around cyber resilience, mean customers can feel comfortable working with outsourcing firms.
In summary, therefore, South Africa has set it up to be the outsourcing destination of the future – one which provides access to highly qualified and talented professionals and services backed by state-of-the-art infrastructure. As the business world becomes increasingly globalised and remote work becomes the norm, outsourcing in South Africa gives companies the tools they need to thrive in the business world of tomorrow.
