Case Study – South Africa as an Outsource / Offshore Destination
South Africa has emerged as a popular destination for Business Process Outsourcing (BPO) due to its favourable business environment, skilled workforce, and cost competitiveness.
The main centres for Business Process Outsourcing (BPO) in South Africa are Johannesburg, Cape Town, Durban, and Port Elizabeth. Here is an overview of each of these centres and the number of BPO companies located in each one:
- Johannesburg: Johannesburg is the largest city in South Africa and is considered the country’s economic hub. It has a vibrant BPO industry with a significant number of companies located in the city. According to the Business Process Enabling South Africa (BPESA), Johannesburg has over 200 BPO companies.
- Cape Town: Cape Town is the legislative capital of South Africa and is known for its scenic beauty and rich cultural heritage. The city has a well-established BPO industry with a focus on customer service and technical support. According to BPESA, Cape Town has over 60 BPO companies.
- Durban: Durban is a coastal city in KwaZulu-Natal province known for its warm climate and stunning beaches. It has a growing BPO industry, with a particular focus on the financial services sector. According to BPESA, Durban has over 20 BPO companies.
- Port Elizabeth: Port Elizabeth is a coastal city in the Eastern Cape province and is known for its beautiful beaches and wildlife reserves. It has a small but growing BPO industry, with a focus on the healthcare and insurance sectors. According to BPESA, Port Elizabeth has around 10 BPO companies.
Overall, these four centres are the main locations for BPO in South Africa, with Johannesburg being the most significant in terms of the number of companies. However, the BPO industry is growing in all these centres, and they offer a range of advantages for companies looking to outsource their business processes.
The benefits of outsourcing business processes to South Africa
South Africa offers a range of benefits for UK companies looking to outsource their business processes. Here are some of the main advantages:
- Cost competitiveness: South Africa offers a cost-effective solution for UK companies looking to outsource their business processes. Labour costs in South Africa are generally lower than in the UK, which can result in significant cost savings for companies.
- Time zone compatibility: South Africa is in the same time zone as the UK during the winter months, which makes it easier for companies to communicate with their outsourced teams and maintain productivity.
- English language proficiency: English is the primary language used in business in South Africa, and the workforce is highly proficient in the language. This makes it easier for UK companies to communicate effectively with their outsourced teams and avoid language barriers.
- Skilled workforce: South Africa has a highly skilled workforce, with a strong focus on customer service and technical support. The BPO industry in South Africa has invested heavily in training and development programs, which has resulted in a pool of highly skilled workers.
- Business-friendly environment: South Africa has a business-friendly environment with a well-developed legal and regulatory framework. The government has implemented various measures to attract foreign investment, including tax incentives and grants for training and infrastructure development.
- Cultural affinity: There is a cultural affinity between the UK and South Africa, which can make it easier for UK companies to work with their South African outsourced teams. South Africa also has a similar legal system to the UK, which can make it easier to navigate legal and regulatory issues.
Overall, South Africa offers a range of benefits for UK companies looking to outsource their business processes, including cost competitiveness, time zone compatibility, English language proficiency, a skilled workforce, a business-friendly environment, and cultural affinity.
Other considerations when outsourcing business processes abroad
As you would expect, there are challenges with so much choice and knowing the right choice for your business. There are many facets to such a choice, with we believe a key focus on cultural fit:
- Work Culture and Values: The outsourcing company should share similar values and work culture as your organisation. For example, if your organisation values teamwork and collaboration, then the outsourcing company should have a similar work culture that values these principles. This will help to ensure that the outsourcing company aligns with your organisation’s goals and objectives. The “Relationship Chemistry” between the outsourcer and the client is critical. Get this right, and problem resolution becomes quicker and more effective.
- Cultural Sensitivity: The outsourcing company should be aware of and respect cultural differences, especially if they provide services to a different country or region. This will help to avoid misunderstandings and conflicts due to cultural differences.
- Quality of Work: It’s important to ensure that the outsourcing company has a good track record of delivering quality work. This can be verified by checking references and conducting due diligence on the company’s past projects and clients.
- Intellectual Property: The outsourcing company should have clear policies and procedures in place to protect your organisation’s intellectual property. This includes ensuring confidentiality agreements are in place and data security measures are implemented.
Overall, it’s important to consider the cultural fit when outsourcing services to ensure that the outsourcing company can effectively work with your organisation and deliver quality work.
With a growing market like South Africa, it is also important to be able to differentiate the provider’s maturity in the services that you are seeking and their core competencies in relation to what is valuable to your own business success.
Burford Solutions can help you with an Outsourcer Selection and Off-Shoring Alternatives in South Africa: We alone perform detailed Due Diligence projects on all Outsourcers before we would consider placing them onto our “Burford Panel of Approved Outsourcers”.
We are experienced practitioners in placing work with our quality service providers in South Africa, and we are also proud members of BPESA: Business Process Enabling South Africa) which is an industry association that represents the BPO (Business Process Outsourcing) sector in South Africa. Their website, https://www.bpesa.org.za/, is a comprehensive resource for companies looking to outsource their business processes to South Africa.