South Africa becoming a major international business outsourcing destination

15th October 2020 By: Tasneem Bulbulia - Creamer Media Reporter

Government and private sector efforts to build digital skills capacity among South Africa’s youth over the past five years are bearing fruit, says nonprofit organisation Business Process Enabling South Africa (BPESA).

CEO Andy Searle says these initiatives, along with several other factors, have favourably positioned the country as a global destination for outsourced projects.

“There has never been a better time than now for the country to begin securing sizable and scalable business services projects and for the tech sector particularly to create meaningful employment opportunities,” he notes.

Searle’s comments are supported by a recent McKinsey report, which views the country’s strong operational and service capabilities in the business process outsourcing (BPO) sector as among the reasons that service exports have been identified as an inclusive growth sector in its 'South Africa Big Five' report.

In particular, the nation’s standing as a key BPO player has been reinforced over the past six months, posits BPESA.

While lockdown measures to contain Covid-19 compromised business continuity across the world, South African contact centres were quick to migrate to remote working models and were able to remain operational with minimal disruption for clients, it notes.

Potential and existing outsourced services offerings extend across multiple industry sectors including finance and accounting, telecommunications and media, human resources and even legal services. Opportunities include call centres, shared and education services, animation, gaming and robotics, it highlights.

South Africa has seen a 22% a year increase in international business services (GBS) projects over the past four years.

“South Africa’s business services sector has established itself as a dependable, world-class delivery location that can serve the international market at scale,” Searle says.

He notes that two broad factors are responsible for South Africa becoming so well positioned so quickly and changing in those five years.

The first was a series of changes in the world environment and the second, constructive changes that have been explicitly driven by various players in South Africa.

The Covid-19 pandemic with accompanying lockdowns and international tensions are also drivers.

“Key countries this year have realised that they have become too vulnerable when placing all their projects in a single geography. They have actively sought to spread their risk by moving some work to new territories.

In addition, the simple economics of South Africa’s attractive currency exchange rate with the key buying markets, combined with very compelling government incentives, make sourcing services here more cost-effective,” Searle says.

BPESA indicates that it is the impact of government policy and effective training of young talent in South Africa that have had the biggest impact, enabling the country to begin managing projects of global size, scope and scale.

“Large-scale investment in training of mainly the youth, excluded from access to good employment opportunities by various social, economic and spatial constraints, has strengthened South Africa's value proposition immeasurably, where so much value is placed on the distinguished quality of service these young people deliver,” Searle explains.

A component of the future growth of the GBS business in South Africa is a plan by the EXPLORE Data Science Academy, Africa’s largest privately-owned training facility for data scientists, to diversify its operations by opening its own international data service centre.