The business process outsourcing market is quickly becoming a critical tool to save South Africa’s economy.
South Africa’s economy is facing a challenge. It has done much to build the foundations of a thriving economy with investment in infrastructure, regulations, and education, but jobs are hard to come by. A talented and ambitious workforce is leaving university with degrees but is struggling to find jobs to match their qualifications. To prevent this new workforce from seeking its fortunes overseas, the government needs to attract jobs from abroad, and it needs to do so now. The Business Process Outsourcing sector could be the answer it needs.
The BPO effect
Business Process Outsourcing has been central to South Africa’s economy over the last decade. Since 2015, it has created more than 115,000 jobs and generated billions in revenue. South Africa has twice been named the BPO destination of the year, attracting interest from companies across Europe, Asia, and the US. Between now and 2030, it is predicted to continue growing at around 10% year on year, bringing investment, jobs, and growth into the economy.
Moreover, the range of those jobs is changing. BPO remains centred on customer service operations such as call centres and back office solutions, but as technology improves and BPO companies become more flexible, hiring companies are starting to outsource operations across all sorts of business operations, including marketing, technology, finance, and legal services. Outsourcing is no longer the reserve of front-line jobs, which might previously have been considered low value – it’s about offering access to talented professionals in a range of disciplines. Businesses are turning to South Africa to supplement their domestic teams with skills and abilities that they may struggle to source elsewhere.
Government support for the BPO industry
With that in mind, the government has taken considerable steps to create a favourable business environment. Overseas businesses can benefit from a range of grants, tax credits, and other incentives to encourage investment. Support can also be available for companies that invest in areas with high levels of unemployment in an attempt to spread growth across the country. The levels of support depend on the number of people you employ, the types of jobs generated, and how they are employed. In some cases, the impact of these support measures can dramatically improve the ROI of outsourcing in South Africa to the point that it competes with even the lowest cost outsourcing hubs such as India and the Philippines.
South Africa’s BPO sector
Of course, South Africa comes into a market that is already dominated by long-established BPO hubs. Businesses have been moving operations overseas to countries with low labour costs for decades. However, that strategy has often met with resistance from customers,
causing many companies to back track and bring operations back into the UK. South Africa has forged a niche in this sector by offering a new approach to outsourcing in which success is measured by much more than just pure bottom-line statistics.
South Africa’s labour costs will never be as low as a country such as the Philippines, but it competes by focusing on quality and value for money. South Africa’s appeal is built on its ability to address the common complaints of traditional outsourcing. Those companies that had previously outsourced operations have suffered a savage backlash from customers. Firms such as Aviva, which moved operations overseas quickly, changed course after a steep rise in customer complaints. BT also had to repatriate operations in the face of adverse publicity. It ran an advertising campaign promising customers that all calls would in the future be answered by someone in the same country.
In contrast, South Africa offers a service which is based on:
Clear communication: English is a primary language in South Africa with a clear, easy-to-understand accent. Customer service agents have no problem making themselves understood. As such, they find it easier to build lasting relationships leading to improved customer retention figures, higher revenues, and fewer complaints.
Technological infrastructure: Superfast internet is widely available across all major cities, enabling fast, simple, and instant communication. Thanks to video conferencing, you can communicate face-to-face with workers in South Africa, while cloud computing allows multiple people to collaborate on a single document simultaneously, regardless of what country they are in at the time.
Data security: South Africa has built a robust regulatory framework that adheres to international best practices. While other outsourcing countries have struggled with instances of cybercrime and fraud, South African BPO companies have stringent security measures in place to prevent data breaches.
Time zone: South Africa’s time zone is close to Europe’s, which means the working days match up. This allows for instant collaboration with jobs often being assigned and completed on the same day.
Although the overall cost of labour in South Africa might be higher than the cheapest alternatives, it more than pays back in the quality of service offered.
The cost of outsourcing to South Africa
As demand for outsourcing to South Africa grows, the sector has evolved rapidly. Hiring businesses can now choose from several options for outsourcing to South Africa, including:
BPO companies: The fastest and simplest approach is to engage the services of a BPO company. These provide you with access to skilled individuals at an affordable rate.
Employers of Record: An EOR serves as the legal employer for all staff in South Africa. It’s a fast and convenient way to hire people across a range of business operations without having to set up a legal entity.
Professional Employers Organisation: A PEO works in much the same way as an EOR, but it uses a shared employment model. You’ll need a legal entity in South Africa and will retain full legal liability for the employees.
Agents of Record: An AOR is primarily focused on freelance contractors. It handles everything from background checks to onboarding, managing contracts, and payment of invoices.
Whichever of these options you choose, the BPO sector has proven vital for South Africa’s growth while offering a host of opportunities for hiring companies. Whether you’re looking to manage costs, access new talent, or find a fast way to enter the South African market, South Africa’s BPO sector offers an exciting opportunity to broaden your company’s horizons and access new opportunities.
