In recent times, South Africa has gained prominence as a preferred outsourcing destination while competing with locations such as Ireland, Paraguay, Malaysia and Poland. In the 2015 Tholons Top 100 Outsourcing Destinations report, which ranks cities in terms of outsourcing attractiveness, three South African cities make the cut – Johannesburg (21), Cape Town (57) and Durban (100). The presence of large-service buyers such as ASDA, Amazon, Old Mutual, Carphone, Lufthansa, British Gas and Virgin Mobile, along with global service providers such as Accenture, WNS, Capital, Genpact, CSC and Teleperformance enable SA to establish a robust supply-demand equilibrium.

In fact, a combination of factors such as cost effectiveness, government support, time zone and cultural similarities and the like has helped South Africa project itself as an emerging outsourcing destination. The selection of an outsourcing destination is a crucial decision process in choosing an outsourcing partner. This decision impacts the long-term success of outsourcing partnerships, hence, non-price factors become very important as cost advantage is no longer the most important objective in outsourcing partnerships. Companies are now expecting more value, enhanced performance, better service and innovation from the potential outsourcing destination.

Cost: South Africa’s cost-competitiveness works in its favour. The country offers 40-45% lower cost compared to near-shore locations in the UK (Northern Ireland etc.) and 10-20% lower than locations in Central and Eastern Europe (Czech Republic, Hungary, Romania).

Cultural alignment and accent neutrality: Drawing on its colonial history, South Africa is culturally very similar to western countries, especially on business protocols, institutional design, legal and educational systems etc., talent in service delivery shows a strong cultural connect with clients in the UK and European countries, in terms of communication and comprehension. This capability is particularly relevant and critical when it comes to process improvements. Neutral accent also helps in better communication with the clients

Time zone: South Africa has a strategically favourable time zone. The time difference is two hours (winter) and one hour (summer) with the UK and one hour with continental Europe.

Quality of labour: South Africa has a steady supply of quality labour as a result of its high secondary education enrollment and availability of specialised training services.

Published 2016 | Deloitte