Offshoring to South Africa
Percepta has recently further expanded our South African business operations. What does this mean for offshoring your contact centre?
There has been a lot of discussion in the press around Africa being a choice for organisations as an offshore destination, comparing it to the more dominant markets such as India, China, and Malaysia. An article in Outsource Magazine predicted that Africa, as a whole, would represent from 10 percent to 15 percent of the total outsourcing market in volume terms by 2013, up from less than 5 percent in 2010.
With some operating experience from Africa, we would like to share our views on what organisations should look for when thinking of offshoring a particular business unit.
The current dominant markets for offshoring are India, China, and Malaysia. Some of the main reasons for this include their large populations and the availability of large, skilled workforces.
Why then, is Africa becoming more appealing to offshoring decision makers?
Nowadays, and especially in the current economic climate, organisations are looking for ways to reduce risk when and where they can; in turn, this means looking for secondary locations to complement primary destinations such as China.
South Africa, where Percepta are based with a major automotive client, is the continent’s largest and most mature outsourcing market. Reasons for this include the two-hour time difference and the quality of high English (and many other European) language skills available.
In the beginning, the types of services being offshored to South Africa were second- or third-line back office support services, but as the market has matured, a lot more front-line, end-user services are now based there. These services are delivered to a range of industry sectors including retail, automotive, and travel.
One thing that has been detracting companies from South Africa is labour costs. Although it is still a much cheaper option than Western European salaries, costs do average between 20-30 percent higher than India. Although the other advantages mentioned above warrant the rise in this type of cost.
To summarise, whilst Africa is not in the league of more mature markets such as India and China, it certainly is a fast-growing, outsourcing location. The main items to consider for client organisations when devising their offshoring strategy is not putting all their eggs in one basket and maybe multi-shoring, looking at the service required with specific regards to language capability and technical expertise, as well as the obvious one, budget.