With Covid-19 proving that work can be done from home, in another city, or anywhere, South Africa’s business process outsourcing (BPO) industry has emerged as a force to be reckoned with for international clients.
By Stephen Joannides, MD: Accenture operations and Africa sales lead
This is a great opportunity to bring jobs to our shores and has recently been recognised by our President as one of the “green shoots” that will steer the nation’s economic future. Already the sector has near 300,000 employees, with over 70,000 of these working for international clients – and this is growing.
Resurgence in outsourcing activity
Despite scepticism around offshoring or outsourcing, it is more prevalent and relevant in today’s pandemic uncertainty, as businesses are pressured to be agile, resilient, and indispensable to customers to survive. Delighting customers in our fast-evolving and competitive world is crucial.
Executives must be laser focused on serving their clients with superior products and services, and in providing an excellent customer experience in the midst of a generational shift in technology and all things digital.
The effort to get this right is immense, so companies are looking for partners who can lighten their load in radically improving entire functional pieces of their operations which would otherwise struggle to secure budget or resource prioritisation. As such, a BPO decision can trigger a broader strategic transformation of the business, not only in the outsourced function, but across core functions retained by the client which now get increased management focus.
Enter South Africa’s world-class BPO providers, who take over the running of specific in-house functions and provide the outcome of that function “as a service” back to their clients, at a higher quality, faster or cheaper – or all three.
Leading BPO providers offer robust business continuity, data protection, and value-add aspects that improve the end customer’s brand experience in addition to their core offerings. They work hard to build trust through alignment with their clients’ language and culture, and are expert in a particular target location or industry; in effect, becoming a seamless part of the fabric of their clients’ business. And while blue-chip clients are certainly the anchor of the BPO industry, we are now seeing growth from smaller firms who might not have considered outsourcing before.
South Africa as a key BPO supplier market
According to a recent Customer Experience (CX, typically served from a call centre) offshoring survey by the Ryan Institute, South Africa ranked fares extremely well – in fact, we were placed top of all offshore locations. Most executives looking for offshore delivery are seriously considering South Africa (over 80% of US and Australian executives, 95% of British, and 100% of Canadian respondents). South Africa also ranks well in impact sourcing as well as social diversity, which is a priority for the UK and Australia where we also score highly due to cultural similarities.
Even Germany considers South Africa as a potential alternative to traditional nearshore locations such as Poland, Czech Republic, or Romania. This could bode well for opportunities across Europe if we can supply sufficient talent with the right language skills.
Many lower-cost locations fare poorly in terms of political and economic stability, however, South Africa is comparatively well placed with regular, multiparty democratic elections and robust competition for votes. We score well for business critical legislative and regulatory frameworks, such as POPIA for data protection, and our judicial process seems to provide comfort it is quite comparable to those in developed economies.
How the South African BPO industry can differentiate
While legislation compliance is a minimum requirement, buyers of CX services want to work with partners that protect brand reputations and deliver great customer experiences. Ultimately, South Africa cannot compete with India and the likes in absolute lowest prices, but we can win with a quality BPO service which cements customer loyalty for our clients.
And while BPO buyers have been looking to South Africa primarily for CX solutions, another area we can win in, based on our experience in South Africa, is more complex business processes such as Finance, Supply Chain, Marketing, HR, and IT being run as a service from our shores. While CX takes more people off the unemployment line quicker; complex business services provide professional career tracks and higher salaries. Over time, this leads to a positive multiplier effect on the broader economy as these professionals earn and spend higher up the value chain and ultimately create further jobs.
Strategic recommendations
Traditionally the outsourcing supply side in South Africa targeted local businesses. However, the real growth lies with international buyers moving roles to our country, where there is an added currency / cost arbitrage lever for the outsourcing business case. South African BPO providers need to be deliberate in identifying their niche capabilities and international target markets, and then focus on opening sales channels in those markets. While this is not the easiest exercise with the current COVID-19 travel restrictions, the rewards are great for local BPO businesses, job seekers and South Africa’s economy.