New report highlights strength of South Africa’s BPO market

For the third consecutive year South Africa has been named the second most successful business process outsourcing BPO market in the world.

Based on the annual Front Office BPO Omnibus Survey 2020, South Africa continues to hold its own in this crucial sector. The McKinsey report says that South Africa’s BPO market has massive potential and predicts it will create 775,000 new jobs by 2030.

South Africa’s BPO market is the second most successful globally

South Africa’s BPO market sits sandwiched between two countries that have been ruling the sector for years. India is in top position and the Philippines third. And while COVID-19 has made life difficult for many industries, the last six months have only further strengthened the BPO sector in South Africa.

Lockdown measures of course made it more challenging for companies around the world. But as we showed at CCI South Africa, contact centres here were quick off the mark. We pivoted to remote working models and to ensure businesses remained operational. Minimal disruption was caused to clients who have trusted their customer service operations with contact centres in South Africa, and this has underlined our strength.

The sector currently employs more than 270,000 people across six cities. And from these, 65,000 serve overseas clients. According to McKinsey, as a sector we will continue to grow our staff base to more than three-quarters of a million over the next ten years. We can expect to see around 65% of those agent roles servicing overseas clients

South Africa is attracting major businesses

There’s a long list of Global Blue-Chip businesses who understand the quality of offering in South Africa and have chosen to place work here i.e. recently Amazon has recognised South Africa’s worth as a business hub. The corporation has hired 3,000 South African people to work for its clients in Europe and North America. To find out why companies are waking up to South Africa’s potential for BPO, read my earlier blog here.

While we were already going strong as a sector, the boost afforded to our worth as overseas service providers by the pandemic strengthens us even further. The BPO sector in South Africa must build on the reputation it’s gained over recent months and look ahead to further and faster growth.

The McKinsey report shows that the global BPO industry is valued at $163 billion. This is projected to grow to $183 billion over the next three years.

The main driver for growth is the 7% annual increase in the business process-as-a-service (BPaaS) subsector, which is fuelled by automation and digitisation. More traditional BPO services, such as customer services are also growing but at a different rate. They still account for almost three-quarters of the BPO industry.

South African BPOs have a number of advantages over the competition

South Africa has a traditionally strong history within the BPO sector, and McKinsey estimates this will continue to grow at around 3% per annum. The overall BPO market here in South Africa has a value of R7.8 billion ($461 million). Around R4.6 billion of this valuation is from the traditional BPO services, leaving BPaas with a value of around R3.1 million ($188 million).

Local BPOs, including CCI South Africa work because we can deliver a great quality customer solution to both large and small multinationals, with high quality efficient agents. We have lower operational costs and higher levels of customer service, efficiency and quality. The BPO sector has also had significant backing from the South African Government.

Funding from the Department of Trade, Industry and Competition to the tune of R2.5 billion since 2007 has strengthened the sector. And of course, the South African BPO service was deemed an essential service during lockdown, which meant that clients could still be serviced around the World, from sites in South Africa.

Plenty of support for the South African BPO industry sector

Business Process Enabling South Africa (BPeSA) is the BPO industry body for South Africa. The body has helped the industry sector to grow by supporting skills development, giving its members access to shared best practice and helped the sector’s overall transition into the digitised economy.

All of these factors combine to show that the BPO sector here in South Africa hasn’t yet reached its full potential. The future of the sector lies in two long-term growth strategies:

  1. Incorporating BPaaS strategies.
  2. Scaling services to overseas markets.

Key markets for South African BPOs are the UK, the US, Canada, Ireland, Australia and New Zealand. The opportunities lie in the relatively low barriers to working with these countries, and that they’re predominantly English speaking. Currently, just under two-thirds of offshore business for South African BPO providers comes from the UK. Canada and the US combine to form 18%, with a further 11% from Australia.