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South Africa has begun to increase its marketing of BPO destinations
South Africa has a contact center industry relatively well-established is still growing around 30% per year. Approximately one third of this increase relates to operations based abroad. Several large companies, such as Lufthansa, Admiral Insurance, Carphone Warehouse, Shell and Asda already have captive centers in South Africa. A solid foundation in place both for South Africa develop and expand in order to build their still relatively new Business Process Outsourcing and relocation offered. But is the country that need to become somewhat near the coast and the offshore destination of choice?
sale of South African major points for the BPO market revolve around language, culture, and the affinity of the product with the UK, Europe and the U.S.. It is the base value, as opposed to cost based. While it is true that companies can certainly hope to achieve an average saving of about 40-50% by outsourcing or relocation to South Africa, which is more competitive than Europe East at around 35%, India still offers an average savings of 70% so competition is not only forged in the economy. Exactly what value can companies expect from the selection of South Africa against other more established BPO and ITO geographies?
linguistic flexibility
It has long been recognized that India and China, the capacity of services customers speaking different languages is extremely limited. Companies looking for external suppliers able to service the pan-European market, or in a suitable location for the establishment of pan-European SSC traditionally have therefore attention in Eastern Europe. Poland, Czech Republic, Hungary, Bulgaria and increasingly Romania and Serbia have a supply of young labor force, language is available to meet their need for linguistic flexibility. South Africa, while not shaping up as well as in Eastern Europe is at stake is the diversity of languages, offers a supply enough impressive French, German, Dutch, Italian and Portuguese speakers, with an average recruitment of the quoted delivery times between 6 and 8 weeks Dutch to Afrikaans to conversion to a longer than 20 weeks. Although South Africa lacks much of suitability for service to the Scandinavian or Baltic markets, apparently equipped to cater for a large proportion of the main European requirements, and the advantage to have a neutral accent, the population of native English speaking is considerable.
A stable workforce
EU enlargement and relatively fast "overheating" established centers in Eastern Europe means that offshore operations in this geography increasingly suffering from high turnover and increasing employee benefits further narrowing of arbitration. The South African workforce is considerably less mobile than their counterparts in Eastern Europe. This, combined with lower demand and a steady supply of well qualified people – the education system produces more than 300,000 school leavers and 100,000 graduates each year – is favorable for companies looking to establish a quality sustainable offshore operation and should give confidence in the ability to deliver to those who are considering outsourcing South Africa. Furthermore, statistics suggest that rates of attrition in the BPO industry in South Africa hover around 15%, which is impressive compared with about 30-35% in India and on average 20-30% in eastern European centers.
Cultural Affinity
South Africa seems at first sight to be an easy target. Shares the same time zone as most of Europe, allowing many companies to avoid paying a premium for after hours work to serve their national markets. Connectivity with major activity centers, Cape Town and Johannesburg is excellent, with 50 + flights from every place in both the UK and USA. No quality infrastructure in terms of property, telecommunications, energy and utilities around major centers. The lifestyle offered by the country in general appeal to expatriate employees, enabling companies to attract managerial talent to assist in all operations and partnerships. Despite high levels of crime does remain a concern for many with the country in general, classified as medium security risk. Although there is no legislation formal data protection is still in operation, compliance with international standards of data protection is common. In terms of monetary policy inflation remained stable at around 5% GDP growth hovering around 4-5%. South Africa also has the advantage of having strong product affinity Western Europe and the U.S. in many sectors, which means that the people who run or work with other CDC for geographies are equipped with a developed understanding course of their subject. All these factors should contribute to a smooth transition of work and relatively rapid return on investment.
Blazing the Trail
Many believe that there is strength in numbers. Although it takes many offshore destination general overheating leads to a decrease employment benefits and increasing dropout rates arbitration, it is certainly comforting credible witness first-class organizations to invest in South Africa, both in terms Created in captivity and established partnerships with outsourced service providers who are among the first to add South Africa to its global presence to provide services. Interestingly, Indian outsourcing players HCL and Patni have already built up a South African presence, realizing that the place has to offer benefits in terms complement its existing offshore supply. Other external providers have moved in already include CSC and Fujitsu, while Asda, Virgin Mobile, and Avis are among those who have established operations in captivity.
Public Sector Undertaking
South African Deputy President has appointed BPO & O as an area priority for development. A program due to run until 2009 and designed to encourage growth in the sector has put in place. Priority tasks for this program, led by the DTI and Business Trust (an alliance of South African firms) include among others:
- Talent Development – A concentrated effort to cultivate a workforce that is internationally competitive to ensure a healthy supply for industry
- Quality Guarantee – Creating Industry Standards
- incentives Incentives – strengthen the infrastructure and provide support sector
- Strategic Marketing
South Africa certainly has a role to play in the current climate of global sourcing and 'right shoring'. unique geography outsourcing is largely a thing the past, having given way to a lower risk global delivery model is more focused on the customer and the timing of processes. Although there is no doubt that Asia offers proposed cost excellent value for high volume, low complexity processes of business, South Africa can step up to the plate in the delivery of a greater volume low and high complexity processes. Offers a real economic alternative to offshore U.S. and European firms who may simply not want customer facing processes run outside Asia. If South Africa can really put their money where their mouth is, a rookie today certainly BPO & O industry has the potential to take off and carve their niche in the global delivery model.
About the Author
Jill Stable is a Senior Manager with Alsbridge plc, the award winning advisors on outsourcing, shared services and offshoring.
Ericsson Global Service Delivery Center Romania