It would be convenient to believe that the South African Global Business Services (GBS) sector is streaking across the global outsourcing landscape as the new darling for offshore locations.
By Andy Searle, CEO of BPESA
This is not surprising as, last month, South Africa placed as the second most preferred offshore customer experience location globally (Ryan Strategic Advisory); another trophy for our cabinet.
This, however, would be to ignore the slow and steady efforts of the Industry, the Department of Trade, Industry and Competition (dtic) and BPESA (the industry body) over the past years to advance and promote South Africa’s competitive advantage as an offshore location in the global outsourcing market.
Over time, and with significant collaboration between the public and private sector, South Africa has built a value proposition based on a skilled and young English-speaking workforce, a sizeable regional and domestic market opportunity, significant cost savings, sophisticated infrastructure and enabling environment, strong ICT and digital capabilities and a strong foundation in contact centres and niche domain areas.
This concerted and steady effort has seen the global services market grow steadily year-on-year, gaining traction and then rapid growth of 22% annually over the past four years, and a notable 34% in 2019.
South African operations provide services to international markets that range from entry-level customer care to highly complex legal and financial services. The industry employs over 260,000 people domestically, with 65,000 of these serving foreign markets.
It is worth noting that the vast majority of those employed are young people with little or no previous work experience which re-enforces the importance of the sector’s adoption of the inclusive hiring practice known as Impact Sourcing.
The investment into this sector has paid surprising dividends in these pandemic times. The apparent features of crowded call centres, high-frequency traffic and touchpoints, standardised biometrics and ever-rotating shifts seem a sure argument for the closing down of all activity.
And yet, this industry was arguably the first to respond proactively, even aggressively, to keep the doors open and endeavour to keep as many of its young people employed as possible.
The very features that have made South Africa a compelling offshore location have been deployed to create innovative solutions that allow for continued operations. Technology has enabled stay-at-home working, ergonomics have been tweaked to safely accommodate workers on call centre floors whilst shift work has been supported by the safe transport of after hour workers.
After eight weeks of lockdown, the sector has pioneered the way in demonstrating how to bring businesses back online. Recent figures indicate at least 48 203 people are delivering essential services or permitted services across the country – a number that grows week on week by as much as 16%. Some 45% of these people are working from home, and 34% are servicing offshore clients. It is not surprising that Trade and Industry Minister Ebrahim Patel has been using the sector as a blueprint for opening up other industry sectors.
This commitment has generated another unexpected dividend. The international buyer market, particularly in the US and the UK has taken notice of South Africa’s ability to continue operations safely and within regulatory compliance.
As competing countries were forced to close or severely limit operations, South Africa was in a position to ‘keep the lights on’, taking on additional volumes of work and picking up the slack of operations in other jurisdictions.
With more offshore work being diverted to South Africa, which confirms the nod that demand buyers have given South Africa’s value proposition, the factors that buyers are now considering when evaluating where to locate offshore services are shifting. Cost is still the primary criteria, although this has long been moderated by the availability of skills and quality service.
South Africa has persistently built up a reputation for affordable quality skills in a cost-competitive operating environment. Emerging criteria fast becoming critical considerations include the country business climate and of course health and safety.
In a new global market, buyers will be looking for locations that offer friendly buyer environments including a welcoming regulatory framework for international investors, better incentives and proactive support in establishing regional operations.
These congenial relations will be essential for buyers considering global geopolitical risk in exceptional global operating environments.
Perhaps the most obvious new, but critical consideration – will be stringent health and safety considerations. Facility management, technology innovation, agile working conditions and health and safety protocol have been elevated to vital measures.
South Africa has the advantage of the moment. Through long and protracted efforts the local industry has proven it offers an affordable quality and scalable labour pool; with a stable infrastructure and a familiar, established commercial operating environment, supportive sector body and government with a well-established legal system.
What is required now is to capitalise on the steady efforts of the past and to press the advantage of the obvious benefits of South Africa as an offshore destination. This will require further and continued collaboration and taking advantage of the positive strides already made between operators in the sector, the industry body and government.