South Africa is one of the fastest-growing regions for customer support outsourcing. Here’s why.
In 2021 the Annual Font Office Omnibus BPO survey named South Africa as the most favoured offshore CX BPO destination. After three years of hovering around third place, it had finally made the leap to the number one position. The move signals a significant shift in the customer support service – from one in which cost was the primary factor to one that prioritizes quality and service. Today the BPO sector has become South Africa’s biggest export and in the West, it is overtaking India as the preferred outsourcing destination. Here are just a few reasons why it can be a good idea to outsource customer support to South Africa.
Customer service excellence
South Africa has put customer service front and center of its offering. In a world in which customers have increasingly reacted against what they see as poor service quality – especially from outsourced call centers – companies have come to see customer service as a critical sales requirement.
According to data from Zendex, 90% of customers say they would switch companies after a poor customer experience. 43% of customers will be more likely to purchase a good customer experience. Data suggests improving customer service can boost revenue by between 10% and 15%. A growing majority of businesses now say that they compete almost exclusively on customer service.
Even so, India remains a ‘powerhouse of outsourcing’. In 2023 the Indian BPO market was worth USD38bn with an annual growth rate of over 7%. Customers might not like it, but despite all the negative publicity businesses were still willing to take the hit.
All of this is bad news for the traditional outsourcing powerhouse of India which has been dogged by a reputation for poor customer service ever since firms first started to relocate their call centers. centersIt backtracked on its decision and quickly promised that 80% of all its calls would be answered by staff based in the UK. Banks such as Lloyds TSB and Santander also moved their call centres while Aviva moved some operations back to Norwich. Powergen followed suit citing the negative impact on customer service. Businesses such as PlusNet began promoting the fact that their call centers were based in the UK – and picked up plenty of new customers as a result.
By 2006, newspapers such as the Guardian were asking “Is it finally time to hang up on Indian call centers”. The impact on reputation, customer relationships, and revenue began to outstrip the cost-saving benefits.
Their decision stems from the fact that outsourcing as a concept can still be immensely valuable for businesses. It saves money, improves efficiency, and reduces the load on internal operations. It might be a trade-off, but it’s one they are willing to accept.
But what if you didn’t have to make that trade-off – what if it was possible to enjoy all the benefits of outsourcing without the negative?
That’s the sales pitch that comes from South Africa. With a good language match and a familiar culture, outsourcing customer service operations here can be done without any of the communication difficulties that have frustrated customers in other locations.
Businesses are taking note. South Africa is the fastest-growing BPO destination in the USA and is fast becoming the destination of choice in the UK. It has become South Africa’s biggest export.
This surge stems from South Africa’s ability to offer a host of benefits that others cannot match.
Language match
English is widely spoken a clear accent that is easy for domestic customers to understand. Miscommunications are less common and customer agents are better able to relate and empathise with customers. As well as reducing frustration and friction in the customer service experience, the ability to manage open and fluid conversations can increase customer retention and also increase supplementary sales opportunities.
Flexible workloads
Retail businesses can experience fluctuations in their sales depending on all sorts of factors including the weather, product launches, or seasonal sales. Outsourcing some or all of your operations to South Africa makes it easy to scale up or down as required enabling you to avoid call dropouts or frustrating delays.
Time zones
South Africa is only one or two hours ahead of Europe and the UK but has a seven-hour difference from the USA which means it can offer different types of value to different countries. For Europe, a close match to working hours makes it convenient for daytime support, while in the US it can help to cover 24-hour support services meaning customers have a skilled customer service operator on hand at any time.
Commitment to Quality
South African BPO providers pride themselves on offering excellent customer service and high quality at all points. Customer experience ratings are 18% higher for South African companies than for Indian. South African call centers also focus on internationally recognized standards such as ISO certifications to ensure customer service representatives benefit from high levels of training, that data will be held securely, and that all queries will be answered promptly and professionally.
Regulations
The regulatory environment is friendly and offers a good match for Western-based companies. Data protection laws are similar to GDPR making for a seamless transition of data to and from South Africa.
The government has also gone above and beyond to create a welcoming environment for foreign companies looking to invest in the region. Growth is a top priority and companies looking to outsource to South Africa can benefit from a host of tax breaks, incentives, and grants linked to the number of jobs they create.
Education and qualifications
Education is improving in South Africa with a high graduate population covering a host of disciplines. The workforce is young, multi-cultural, and offering expertise across a wide range of industries.
This means customer service representatives can offer a high level of expertise enabling them to assist with more complicated customer service requests. For example, South African call centers can be used to deal with IT support, especially when offering out-of-hours support services to back up domestic support operations back in the host country.
Excellent IT infrastructure
IT infrastructure is excellent across the country, especially in the cities. Faster communication technologies make it easier to communicate cheaper and more efficiently and for South African professionals to collaborate with their counterparts in the host countries.
The country has high-speed connectivity and innovative technological platforms are enabling the industry to power ahead bringing cutting-edge solutions to support their foreign clients.
The faster and more reliable communications become the less of a problem the distance barrier is. Today it’s as easy to collaborate with multidisciplinary across borders as it is with people located in the next town.
Moving customer services to South Africa
The South African BPO market therefore is a major success story – one that according to recent figures is creating 20,000 well-paying jobs in the country every year. The government is looking to build upon its unique value proposition with further investment in government support, technological infrastructure, and training.
As a business, therefore, South Africa not only represents an excellent opportunity in the short term but also in the years to come. However, to maximize South Africa’s potential, it’s important to adopt an effective strategy.
To do that you may consider some of the following questions:
• Location: Different areas of South Africa offer slightly different propositions from an
outsourcing perspective. Durban and Cape Town have become particularly strong customer service hubs thanks to their relatively low cost of doing business, widespread proficiency in English, and highly diverse, multicultural workforce. Both cities also lead the way in technological infrastructure.
• Regulations: whenever you operate in a new country you need to get to grips with the regulatory landscape. South Africa is no different. Labor laws can be strict and are continually evolving. To stay compliant you need a full understanding of existing laws and the ability to keep abreast of any changes. For a foreign country that can be difficult without local help.
• Operating costs: The cost of setting up will depend on many factors including your location the number of South African nationals you plan to employ (which could influence any government support) and your business structure.
To help with each of these you can work with several locally based organizations that can help you manage your expansion into South Africa in a more cost-effective and compliant manner.
• Employer of Record: With an EOR you hand over the work and legal liability of South African employees to a specialist company. It will serve as the legal employee of all your workers which means they are responsible for ensuring all employees receive the right benefits and are classified correctly.
• Professional Employers Organisation: In much the same way as EOR’s PEOs handle the legal and administrative requirements of managing employees. However, the structure is slightly different. Employment is shared between you and the PEO which means you will still have a legal liability in case of non-compliance.
Both options avoid the need to set up a local entity and as such represent a more affordable alternative to setting up a local branch of a subsidiary. It can be a bit like having your own dedicated HR department with the resources and local knowledge to help you meet all your obligations.
For those who work with contractors and freelance, an agent of record (AOR) can handle all the work of onboarding, classification, and managing relationships. It serves the same role as an EOR or PEO but is better suited to companies that will not be working closely with full-time employees.
Which option you choose will depend on the specific goals that come with your expansion. Having the support of a local entity can be a good foundation for a step-by-step expansion which could see you testing the water with a local entity before investing in a full subsidiary.
Whichever way you approach it, therefore, South Africa appears to offer a unique proposition that gives it a special place in the BPO market. It offers something that few others can match: widespread English, a diverse and highly educated workforce, good IT infrastructure and a
welcoming regulatory environment. South Africa has latched upon business process outsourcing as being the key to future growth. With investment growing, and infrastructure developing, the country is quickly establishing a reputation as the world’s go-to customer service provider.
For more information on the opportunities of outsourcing customer service operations to South Africa, download our handy guide.
