South Africa’s BPO sector surges on the back of global recovery

South Africa’s BPO sector surges on the back of global recovery

As world economies drive their COVID recovery plans and reopen markets, South Africa’s Business Process Outsourcing (BPO) sector has surged on the back of steps taken by global businesses to mitigate their location and overhead risks by offshoring to the country.

With South Africa nominated most favored offshore destination for CX delivery services in 2021 in the Ryan Strategic Advisory BPO Omnibus Survey, sector stakeholders need to act strategically to entrench the country’s attractiveness to global markets by building on its reputation and operational resilience during the last 18 months of the pandemic.  Right now, SA’s BPO sector is one of the country’s fastest growing exports and is well positioned for growth, investment and job creation.

“The sector has demonstrated strong operational and service capabilities and has not faltered in its business continuity efforts, despite the tremendous upheaval that was wrought by the pandemic. SA’s BPO businesses quickly migrated to remote and hybrid working models to ensure that operations and service delivery continued with minimal disruption. The ramping up of our vaccination programme to include people from 18 years and older is also a major step for the industry which employs mostly young people under age 35,” explains Clinton Cohen, CEO of iContact BPO.

iContact is a BPO serving predominantly global businesses and specialises in inbound and outbound sales and support services, customer experience and back-office fulfilment.  iContact BPO is part of the Alefbet Holdings group which has headquarters in Johannesburg and Cape Town and employs some 1500 full time employees. 

Cohen adds that the global interest in South Africa as a BPO destination is underpinned by numerous factors.  These include the drive for greater operational efficiencies as companies look to recover from the economic and operational fallout from COVID-19, achieving economies of scale and cost competitiveness, South Africa’s reputation in service excellence and English proficiency, and a large, skilled workforce which allows for rapid scale without compromising quality and compliance. Equally important, the digital revolution brought about by the pandemic, which is likely to remain an enduring feature of business in future, demands the provision of strong technical and customer service support through call centres which many businesses are simply not geared to provide inhouse.        

“Global giants like Amazon recognised SA’s potential and recently set up customer service operations here, employing an additional 3 000 people during 2020, bringing its total headcount to 7 000 employees to support its customers in Europe and North America. As iContact BPO, we have also seen significant growth in new global business accounts, recently landing three new clients in the United States, United Kingdom and Australia where we are providing fully outsourced CX delivery services, sales and back-office fulfilment services,” adds Cohen.

Besides the obvious considerations of technology infrastructure, linguistic capabilities and our stable business environment, a key advantage that South Africa has is a large pool of skilled labour which means that scale can be rapidly achieved.  “Speed to market, flexibility and professional delivery are key factors that global clients look for, and South Africa offers this in abundance.  As just one example, we recently geared up for a US-based automotive client, hiring 100 skilled agents in less than 100 hours, including management appointments, to handle an incredibly pressured and time-sensitive client.  There are few BPO sectors in the world that can provide this sort of agility and rapid scaling while maintaining quality and compliance requirements,” adds Cohen.

The BPO sector’s growth is also very good news for youth employment in South Africa.  According to McKinsey’s South Africa Big Five report, the BPO sector currently employs over 270 000 people in six cities, of which 65 000 serve international clients. 

This total staff base could grow to over 775,000 jobs by 2030, with up to two-thirds of these in the service of overseas markets. 61 percent of existing offshore business in South Africa comes from the United Kingdom, 18 percent from the United States and Canada and 11 percent from Australia.

“When you take all the advantages that SA has to offer, and you then factor in the benefit that our exchange rate offers global businesses, it’s a big win in terms of costs and economies of scale.  South African BPO providers are more cost competitive than our European and American counterparts, with a fully loaded cost base approximately 11 percent below the global average – making SA a very attractive option for outsourcing at a time when businesses across the globe are under enormous pressure to cut costs and drive profits.  SA is currently the third largest offshore location for UK and Australian organisations which enjoy up to 60% cost savings compared to onshore service delivery, along with a comparable if not better quality of service, cultural affinity and great work ethic of our people,” says Cohen.

The South African BPO market still has room to grow

The McKinsey report further points out that with the strong support from Government and industry stakeholders and bodies such as Business Process Enabling South Africa (BPESA), and in the context of a growing global industry, the BPO sector in South Africa has a way to go to realise its full potential and there are solid prospects for long-term growth for the industry by scaling services to the international market. The Department of Trade, Industry and Competition has provided funding of approximately R1.3 billion between 2007 and 2018, with a further R1.2 billion committed in 2019. The BPO industry was also given essential service status which ensured that local providers could continue to serve their clients during the lockdown. The BPO industry is also a leading light in terms of ‘impact sourcing’ – employing socio-economically disadvantaged individuals as principal workers in its contact centres.

“The business growth of South Africa’s BPO sector is underpinned by delivering strong offshoring fundamentals, bringing together the best of economics, quality BPO services, rapid scale when needed, high service levels, socially responsible supply chains and an absolute commitment to the operational performance metrics that matter most to our business clients. It is very clear that the impact of COVID-19 will be long-tailed, and it will also not be the last pandemic that the world experiences.  Thus, as businesses look to diversify their BPO locations in a bid to mitigate their location risks and the potential for service interruptions, South Africa’s BPO sector shines a light on how to achieve and maintain operational resilience and service excellence in the face of a crisis as a key competitive advantage,” concludes Cohen.   

For more information visit www.icontactbpo.com

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