IT’s homecoming revolution – outsourcing trends back to local shores

South Africans have long held the perception that overseas is better, when it comes to goods, services, even qualifications.

September 3, 2012

By Gerrit-Jan Albers, Service Delivery Manager at RDB Consulting

South Africans have long held the perception that overseas is better, when it comes to goods, services, even qualifications. This, along with the attractive pricing structures offered by destinations such as India, led to a trend of outsourcing to global companies or offshoring services to foreign destinations. However, recently this trend has begun to reverse, and companies are once again bringing their outsourced services back to local shores. The reality is that South Africa has a unique culture, both in terms of personality and of doing business, which no foreign provider can fully understand. This, along with other factors, has lead organisations to once again seek local outsource partners, particularly for critical IT services.

The main reason that companies look at outsourcing options has always been cost, augmented by a need to access specialised skills. With the ongoing economic crisis and a definite skills shortage in South Africa, outsourcing has become an increasingly attractive option, but this has not necessarily been good news for local outsourcing providers. Amongst IT particularly a perception exists that it is more cost effective to offshore certain IT functions to specific destinations, which has driven a large migration of services to foreign shores. There is also a perception that international qualifications are of a higher standard and therefore overseas outsourcing providers can deliver better services, which has also pushed a lot of outsourcing business to other countries.

However, this is not always the case, and often the truth is very far from this perceived reality. South Africa is a unique culture, with its own business practices and idiosyncrasies which are very different from those of India, America, and even from other African countries. To deliver appropriate services to local companies, it is typically best to have a local outsourcing provider who will understand this culture and way of doing business and thus will deliver better quality of service. Added to this, while the skills shortage is a reality, this is not a purely South African issue but a global trend, and the skills needed in the majority of IT scenarios do exist locally. Pulling in an overseas outsourcing provider to obtain these skills could as a result end up being far more expensive than obtaining these skills locally.

When it comes to offshoring, you generally get exactly what you pay for, and the service levels may not live up to business needs or expectations. If providers are overseas it can also prove challenging to support and deal with issues quickly. The offshoring model may appear cost effective at the outset, but if problems occur someone will typically have to travel to the offshoring country to resolve these problems, which results in unnecessary travel expensive and long downtime, which for certain mission critical IT areas such as the database is not acceptable and could cripple the business.

As a result of these and other factors, the overseas outsourcing and offshoring trend has started to reverse, and organisations are once again looking for local outsource providers to deliver, particularly with regard to mission critical IT services such as database and operating system support. Local providers understand local conditions, needs and ways of doing business, and have a cultural affinity that makes doing business a far smoother process.

Having a local provider also ensures that onsite support can take place for faster response and more effective problem resolution. As much as technology has evolved, a face-to-face presence makes achieving clarity on problems and issues far easier, and these onsite resources can also be involved in projects from the start, from architecture through to support and maintenance, ultimately delivering superior service levels.

For local outsourcing providers, the best way to ensure customer retention and prevent clients from migrating overseas or offshore is to differentiate services. Pricing is important, but guaranteed uptime, proactive services and effective problem resolution are also vital. For organisations looking at outsourcing services, it pays to do your research. Offshoring and overseas outsourcing may seem like attractive options, particularly in terms of price, but the reality is often that a local provider will deliver better service for a very similar price, if not for less.

IT is the heart of modern business, so to ensure maximum productivity and profitability it is vital to ensure IT services deliver as expected. Before shipping services overseas, make sure you know the true cost, taking into account more than just the immediate price. Local is lekker, and you will often get better service while supporting the economy if you contract the services of a local outsourcing provider.