Outsourcing Consulting Implementation Work to South Africa

Written by Tania Knoetze | Oct 17, 2022 10:00:00 PM

Outsourcing – contracting out activities that are not part of your business core function, to a third party, either locally or internationally – generally provides the outsourcing company with various benefits, including increased ability to concentrate on what they are best at doing. Consulting services relate to the provision of professional or expert advice on business and technical matters.

South Africa, ranked as the third largest economy in Africa, with a Gross Domestic Product of US$418 billion in 2021, has become a popular business process outsourcing destination for global clients.

Covered In This Article

Growth since the early 2000s
Benefits of outsourcing to South Africa
Challenges in outsourcing to South Africa
Business Process Outsourcing as an essential service
Digital maturity and increasing investment in Martech solutions
Velocity: A Hubspot Platinum Solutions Partner

Growth since the early 2000s

Since the growth of outsourced call centre services to South Africa in the early 2000s, the outsourcing industry has seen a rapid expansion in the range of outsourced services offered, with year-on-year growth of 22% between 2014 and 2018. These services include a variety of back-office and front-office functions. Post Covid-19, the shift to remote work has also contributed significantly to the growth of outsourced consulting services. Highly skilled individuals can now work from virtually anywhere across the globe.

The top industries currently being outsourced to SA include:

Customer Support Services
Information Technology including technical support, web and app development, software development, cloud services, cybersecurity and data analytics
Financial services including accounting, taxation and financial advisory services
Human Resources including recruitment, payroll management and HR consultancy
Sales and Marketing including lead generation and increasing brand awareness.

Despite large-scale unemployment, inequality of income and poverty the World Bank has classified South Africa as a newly industrialised nation. SA was also named the “Offshoring Destination of the year” in 2016 and 2018, and in 2021, was voted “Most Favoured Global Offshore Customer Experience Delivery Location.”

Benefits of outsourcing to South Africa

Various factors have contributed to SA being an ideal destination for outsourced business processes. These include:

Cost savings - with relatively low labour costs, lower costs of living, and an exchange rate which favours foreigners, companies outsourcing to SA could be saving as much as 45% to 50% of their expenses, in comparison to running such services from the UK, USA or Australia.
Businesses looking to outsource services to SA can capitalise on the low average salary in SA in 2022 - the equivalent to about US$2 000 per month or US$24 000 per year, which is much lower than the average monthly salary in the US (7900 USD) and the UK (7500 USD). The average salary also depends on various factors such as level of education, work experience, job title and industry. Annual average salary increases vary across industries between 8% and 18%, but the frequency of increases is also dependent on the individual employer. Salaries are also dependent on geographical locations.
The South African Department of Trade, Industry and Competition also offers several incentives to companies through its Global Business Services Incentive Programme. The programme aims to create employment opportunities in South Africa through servicing offshore activities.
A synchronised time zone, with SA time set at GMT+2, provides a further advantage. While this time zone is in sync with several other European countries, the country has the capacity to provide offshore clients in the US and Asia with nighttime support.
The larger time difference between the US (6 to 9 hours) and Australia (6 to 8 hours) enables those global players to offer 24/7 customer service.
Simplified intercontinental communications are possible, as English is the most commonly spoken language of the country’s growing talent pool.
A mild accent also makes for easier communication with other countries and this brings further cost savings - companies outsourcing their business process service to SA, also do not have to spend money on accent neutralisation training. In fact, South Africa ranked 12th place in the 2021 EF English Proficiency Index, outranking several other prominent outsourcing locations, including Poland (16th), Malaysia (28th), India (48th) and China (49th).

Apart from native languages, many South Africans also speak French, German and Portuguese.
Cultural alignment with the western world allows for improved understanding - South Africans are exposed to an extensive selection of British and American cultures, movies and TV shows, which increases their ability to interpret and understand foreign cultural norms and nuances.
SA also celebrates many of the same major holidays as other countries, including Easter and Christmas. With very similar calendars, working together becomes even easier.
Through advanced infrastructure, including an extensive road transportation network, multiple ports of entry, and the SEACOM telecommunication network (broadband submarine cable system) allowing for global connectivity, South Africa has become a noteworthy competitor to top outsourcing countries such as China and India.
Extensive talent pools - with a massive labour market, and a very high unemployment rate, companies looking to outsource to South Africa are likely to quickly find the right candidates for the job. With South Africans generally known for their strong work ethic, and commitment to a high-performance culture, there is a wide range of skill sets available.
One that is probably most noteworthy is the CA(SA) designation. Listed by the South African Department of Home Affairs as a scarce skill, the demand for chartered accountancy, and South African CA’s continues to grow. The designation, which denotes a global understanding of business expertise, methodologies and accounting standards, is recognised across the world in every sector of finance and business. South African Chartered Accountants, with strong analytical skills and in-depth training and experience, make for strong business leaders. Mandated by the South African Institute of Chartered Accountants (SAICA) to be ethically minded, these leaders place a lot of emphasis on the sustainability of business operations and good corporate governance. SAICA is also recognised as one of the world’s leading accounting institutes.
In addition, SA has also been ranked by the 2022 Global Finance & Accounting Outsourcing Marketing Intelligence Survey as a leading international offshore location for finance and accounting-related services.
An ongoing supply of university graduates applying for entry-level positions, as well as highly experienced and qualified employees for critical business-related industries, such as Information Technology, Finance Accounting and Legal Services, provide foreign businesses with access to a large talent pool at a cost-effective rate.

Global role players like Amazon have capitalised on the benefits the country offers and in June 2020 announced that they planned on hiring 3 000 South Africans in work-from-home customer service and technical support roles to service its US and UK clients. Other companies currently outsourcing to SA include IBM (IT services), Fujitsu Siemens (IT solutions) and Lufthansa Airlines (Customer Services).

Challenges in outsourcing to South Africa

Three main challenges that face the outsourcing industry in South Africa include:

The economic impact of the pandemic
As with the rest of the world, South Africa felt the impact of the Covid-19 pandemic both through the human tragedy and loss of life, as well as through its economic impact on the country. Despite GDP declining by 8.2% in 2020, coupled with a drop of almost 40% in foreign direct investment flow to SA, businesses in South Africa were much more adaptable to remote work than some other outsourcing locations. GDP recovered to a 3% increase during 2021.
As with the rest of the world’s labour force, many highly skilled South Africans joined the “great resignation” and moved to remote work, which allows them increased flexibility in managing their time, as well as exposing them to working with global clients across different time zones.
Inconsistent electricity supply
Disruptions in power supply in the form of load shedding by the national electricity provider, Eskom, have become somewhat of a norm in the country. Many businesses and individuals have however adapted to this, using generators and Uninterruptible Power Supplies (UPS), while there is increased investment in green energy alternatives such as solar power.
The availability of load-shedding schedules in advance, via notifications and apps, has helped residents and businesses to plan their time around these disruptions.
Lack of reliable transportation
While many employees in SA have to rely on public transportation, the various cities across the country have different levels of development of train and bus services. Commuters are also served by minibus taxis, which have a significant cost attached to them - in some areas commuters have to spend as much as 50% of their monthly income on transportation to and from work, compared to the benchmark of 10% for commuters in developing countries.
With the move to work-from-home opportunities, transportation has become somewhat less of a challenge and businesses that want to outsource their processes to South Africa will benefit from offering flexible working schedules.

Despite the challenges, the country has continued to remain resilient.

Business Process Outsourcing as an essential service

One of the factors which helped SA recover relatively quickly from the Covid-19 pandemic in an economic sense was that the national government granted the business process outsourcing (BPO) industry with “essential service status”. This meant that local providers could continue providing services to clients during the country’s national lockdown period of April and May 2020.

The lifting of lockdown restrictions, the hybrid model of having employees in the office on a rotational basis, while spending the majority of their time working from home, has boosted the ‘gig economy'. This labour market, which is heavily dependent on temporary and part-time positions filled by contractors and freelancers, offers benefits for both employer and employee. An increase in the talent pool and hiring employees at more affordable rates can provide businesses with significant cost savings - there is no need to cover health insurance and other benefits that would normally be attached to traditional permanent positions. On the other hand, employees gain greater choice and flexibility in selecting what jobs they want to do and when they want to work.

Digital maturity and increasing investment in MarTech solutions

Known for its ability to bounce back from challenging and variable market conditions, South Africa thrives on innovation. Continuous changes in customer needs and preferences, and increased investment from technology leaders such as Google, Microsoft, IBM and Meta, have boosted development in customer platforms and digital commerce. As a result, many marketers are looking at MarTech as the sweet spot to engage with an ever-growing and demanding audience. Brands need to keep up with digital innovations.

The GoogleBCG Benchmark categorises organisations into four stages of digital maturity in terms of marketing:

Nascent – these are businesses that continue to employ traditional marketing techniques through campaigns
Emerging – these businesses have begun data collection but continue their reliance on single-channel optimisation
Connected - these companies have integrated data analysis across a broad spectrum of their operations
Multi-moment – these businesses tailor their marketing strategies to individual customers.

With increased emphasis on building customer experiences and relationships, knowing your customers is now a cornerstone of a successful marketing strategy. This requires investing in MarTech which addresses the full array of customer data, customer intelligence, content and attribution:

Customer data
With the continuous migration of consumers to online platforms, the opportunity exists for businesses to collate extensive volumes of customer data from various sources, including loyalty programmes, e-commerce and point-of-sale data. This can provide key insights when developing targeted marketing strategies.

Customer intelligence

Collating and analysing information regarding customer demographics, transactional data, motivations and behaviours, helps organisations improve their understanding of customer expectations, segmentation and how customer journeys can be improved.

Content

Content that engages the target audience is likely to build better relationships over the long term, making it easier to eventually convert them into paying customers. Whether you choose to create targeted emails, blog posts, social media or video content, a MarTech solution can help you drive innovation and achieve your marketing goals or objectives.

Attribution

With so much data and insight available into customer preferences, it now becomes possible, and in fact necessary, to determine which marketing tactics contributed to the success of your business in terms of lead generation, lead conversion, sales and revenue growth.

Enter Velocity: A HubSpot Platinum Solutions Partner

With the growing trend in outsourcing business processes, it simply makes business sense to start outsourcing your non-core business processes to a service provider like Velocity.

Key industries have already proven the success of outsourcing to South Africa, combined with the very attractive benefits of cost savings, synchronised time zones, simplified communication and cultural affinity. The industry, built on advanced infrastructure and supported by the extensive talent of highly qualified professionals, creates fertile ground for your business to grow.

As a hybrid advisory, technology, and inbound marketing company, focused on optimising the entire customer lifecycle and enhancing business performance, Velocity offers a diverse range of services through a highly talented team of digital marketing professionals, copywriters, designers, developers and business analysts.

This allows us to help you analyse and optimise your business processes, remotely, and apply an inbound marketing methodology, allowing you to reduce risks, target the right audience and boost revenues. Automating optimised processes saves you time and money while providing you with detailed dashboards on your business performance, making for improved decision-making.

As a HubSpot Platinum Solutions Partner, we help companies to track and nurture leads and analyse business metrics. HubSpot provides all the tools you need for B2B demand generation in your business. Through building content and user experiences that translate into revenue growth, we are your South African outsourcing consulting implementation partner. Contact us today to discuss how we can help you take your business further.

Sources

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