Why Aussie firms are increasingly outsourcing to South Africa

29 October 2020 Consultancy.com.au 5 min. read

As Australian companies wrestle with the economic and social impact of the Covid-19 pandemic, many are realising that old ways of operating are no longer an effective approach. 

Buffeted by disrupted supply chains, shifts in customer demand, and with staff forced to work remotely, companies are reviewing workflows and processes in an attempt to cope with what has become a new normality.

One factor being faced by most organisations is a need to quickly ensure business continuity and reduce costs. With revenues significantly down, any failure to dial down operational expenses will hit the bottom line and could even spell the end of the business. 

Companies have quickly realised the need to manage risk and diversifying the geographic locations from which their customers and key processes are being serviced. It is no longer if, but when disruption affects teams in one delivery centre. Brands need to be able to shift and rely on workforces elsewhere to ensure continuity. 

Why Aussie firms are increasingly outsourcing to South Africa

“Companies need to ensure business continuity and new channels to engage with their customers,” says Martin Roe, Group Chief Executive Officer at business outsourcing specialist firm, CCI Global. “They have to find not only uninterrupted and cost-effective channels, but quality-based strategies to interact with customers and ensure they remain loyal to the brand.” 

Business process offshoring

One approach that is attracting increasing attention is the offshoring of key business processes. Examples include customer acquisition campaigns, ongoing communication and engagement programs, and post-sale support services. Roe says that, in the past, many organisations had been unwilling to have such customer engagement activities conducted by teams located outside Australia, often times associated with fear around the quality of service that could be experienced.

Robin Hoekstra, CEO at Outworx, suggests another factor resulting in organisations hesitating when it comes to business process outsourcing (BPO) is security and compliance. While it’s possible to monitor and direct staff within a company, it requires a “leap of faith” to believe compliance will be followed by external teams. 

“Many organisations will want to know that their chosen outsourcing partner has the mechanisms in place to ensure adherence to key compliance standards such as those of the International Organisation for Standardisation (ISO),” he says. 

The benefits of South Africa

Historically, business process outsourcing has tended to be associated with countries such as India and the Philippines. Established firms with large teams in those locations are regularly called upon to undertake activities such as inbound and outbound call centre operations through to more intricate back-office workflows and data processing. 

Yet Australian organisations tend to hold back when considering outsourcing more customer facing activities to these markets. Typically, they’re concerned that training, language and cultural differences will result in lower standards than they can achieve in Australia.

In recent years, however, a growing numbers of Australian firms have been making use of the abundance of culturally aligned business process outsourcing resources that are available in South Africa, says Andy Searle, CEO of Business Process Enabling South Africa. 

“The South African market boasts a range of established providers that deliver world-class levels of service to organisations operating across a wide variety of business sectors. In excess of 65,000 individuals in South Africa deliver services across the globe, including into Australia,” he says. 

“The quality of service provided by South African-based operators is reportedly equal to or better than what is being achieved in Australia by onshore teams,” adds Igshaan Soules, Managing Director of Altron People Solutions. “This is aided by the fact that South Africa’s language and cultural fit is significantly better than what is on offer in some countries.”

Howard Blake, Founder of Blake & Associates, adds that companies are also increasingly considering South Africa as a location for business process outsourcing because of a culture of compliance that exists within the country. South Africa was a founding member of the International Standards Organisation and has its own internationally aligned Bureau of Standards who are the current convener for the published ISO Customer Contact Centre Service Standards 18295.

Hoekstra concurs and says that compliance with not only ISO standards but other standards is an important factor and one that is rigorously followed by a number of outsourcing firms in the country. This means potential customers can be assured that service quality, security and data privacy compliance as well as global regulatory guidelines are known, understood and will always be followed.

Such factors are making South Africa an increasingly attractive location for outsourced business processes. Both the exchange rate between the South African rand and the Australian dollar as well as lucrative government incentives further enhances the opportunity to service customers, not only across a foundation of quality, but services can be delivered far more cost effectively than similar services provided onshore. Industry estimates point to South African operations being at least 50 per cent lower cost than an equivalent onshore Australian operation. 

“With the struggle against pandemic and natural disaster related disruptions set to continue for the foreseeable future, global organisations that opt to diversify their geographic reach and outsource a number of business processes to South African partners are likely to be much better placed to continue both operations and servicing customers in the future,” concludes Searle.