South Africa, Western Cape is seeing significant BPO investment

Experts say that South Africa, particularly the Western Cape, is seeing significant growth as a Business Process Outsourcing (BPO) destination.

February 5, 2013

Experts say that South Africa, particularly the Western Cape, is seeing significant growth as a Business Process Outsourcing (BPO) destination.

Bruce von Maltitz, director of hosted call centre technology provider 1stream, says that this proves that international companies are seeing the value of South Africa as a lucrative offshore destination for their businesses. “About a decade ago, the general perception was that offshoring negatively impact customer service. Now companies realise that they can enjoy the full financial benefits of running a call centre in countries such as South Africa, without compromising on quality.”

Companies such as Capita and Serco BPO, one of the largest diversified outsourcing groups are currently in the process of building large call centres in Cape Town. At the same time, Indian firm WNS recently acquired SA based Fusion Outsourcing, whilst UK-based Everything Everywhere set up shop to serve their 27m-strong customer base. Large players such as wonga.com and Amazon have already been well-established in the area.

Von Maltitz believes that the operating environment in South Africa makes it particularly attractive to companies that want to set up a call centre off shore. “South Africa has cheap labour, skilled workers and many English-speaking professionals. It makes us a very appealing destination.”

Gartner analyst Partha Iyengar also believes that offshoring is likely to create 40 000 jobs in South Africa by 2014, with 120 000 staff in the domestic insourced sector. He added that offshore contact centre jobs are expected to grow from 8 000 in 2010 to 30 000 in 2015.

“South Africa is not yet synonymous with offshoring, the way that countries such as India or the Phillippines are, but that is definitely going to change,” says Von Maltitz. “Cost is becoming a deterrent. It has become cheaper to rent space in downton New York than in Mumbai’s commercial space, and companies are feeling the pinch and starting to look elsewhere.”

Although Iyengar warned that there is still of a dearth of IT skills in the country, Von Maltitz believes that this is easily overcome by using hosted technology. “By moving the call centre into the cloud, there is no need for an in-house IT department or even IT assets – in short, creating a solution that enables companies to deploy what they need when they need it. After all, the more premise-based a company’s IT is, the more difficult it becomes to adapt, manage, expand and relocate.”

Von Maltitz believes that the consultative backup of hosted providers and the improvements in connectivity will secure South Africa’s position as a destination where companies can conveniently set up shop. “The multinationals we’ve worked with said that the experience was positive,” he concludes.