Why outsource to South Africa

The South African Call Centre industry has evolved rapidly over the past ten years, gaining in experience and knowledge. Call centres in specific sectors of the industry, such as financial services, healthcare, travel and utilities are well integrated and perform above industry benchmarks in most key areas of performance.

With the rapid growth of the Call Centre industry, South Africans have developed the skills to design, build and operate call centres rapidly and at reasonable scale.

Many call centres offer multiple languages and support both sales and service activities and South Africans have learned how to operate efficiently and effectively in these relatively complex environments.

The international business community has demonstrated its confidence in South Africa by placing more than 2500 seats in the country in the past three years.

It currently is a “Buyer’s Market”, thus companies seeking to outsource their call centre can secure and negotiate better pricing, terms and service than during boom times.

As a result, outsourcers are offering flexible contracts such as one-year renewable clauses in a typical three year contract, thus allowing companies to drop an outsourcer after one year, or after the second year, while the price remains the same.

There has recently been a change in the nature of the things that are being outsourced. Until now, it has generally been intangible things such as business processes that have been outsourced. This has shifted to full operations, signifying confidence in the outsourcing philosophy.


Reasons to outsource to SA


South Africa's Call Centre Industry

South Africa presently has 535 call centres, over 47,000 seats, and 79,000 employees in the CC industry and more than 18 local CCs providing services to the international market

The Mitial country report of 2002 / 2003 indicated rapid growth in the number of call centre sites in 1997 (24%), 1998 (33%) and 1999 (21%), slowing to 10% in 2001. The report projected a gradual increase in the growth rate from 10% in 2001 to 14% in 2005.


Low Call Centre Wages

South Africa’s labour costs are significantly lower than in the US and UK.

Wage inflation has remained stable and low. Growth in average agent compensation over the last year has been effectively zero. Salary inflation is believed to be at a similar level to the UK and significantly lower than other offshore locations such as India. The fact that rates of agent pay have remained stable while agent numbers have grown 30% is a sign of reassuring stability in the labour market.

Employment legislation is reasonably flexible on working hours and overtime – it is perfectly acceptable for employers to contract with employees that overtime need not be paid. In any event restrictions on working hours and overtime cease to apply once staff are paid more than R89,000 per annum (R7,417 per month).

Position Typical Annual salary
Call Centre Manager R372,000 (US$56,278 or GBP30, 845)
Team Leader R182,900 (US$27,670 or GBP15,165)
Inbound agent R54, 954 (US$8,313 or GBP4, 556)


High Agent productivity

On average agents are working 168 hours per month and team leaders 175 hours per month. The statutory maximum is 195 hours per month (45 hours per week). This works out at 39 hours per week, which is roughly mid-way between the average working hours of UK agents (37.2) and Indian agents (43.3).


Low Absenteeism

A survey of Cape Town Outsourcers, conducted by Callinthecape, revealed the rate of absenteeism (percentage of working hours lost to absenteeism) was 5.9%, within industry norms. Absenteeism was higher at outbound contact centres.


Low Call Centre Staff Attrition Rates

Voluntary Call Centre staff attrition rates are low at 5-7% (vs. 35-40% in India) in the major centres and as low as 2% in the smaller centres (e.g. East London and Port Elizabeth) and the South African work ethic appeals greatly to the international market.

A recent study conducted by CallingtheCape, in association with Deliotte showed that in Cape Town, a survey of 47 companies (both local and international) revealed an average attrition rate of 10.7% per annum.

A more detailed survey of the outsourcers revealed total attrition of 15%, comprising 8% voluntary and 7% forced attrition. Forced attrition is likely to be higher in outsource than in captive contact centres, due to a preponderance of outbound work and more regular and rigorous performance analysis.

Cape Town’s attrition rate amongst outsourcers of 15% compares favourably to UK outsourcers (35.7%).

Attrition in India was reported to be 24.3% by ContactBabel in 2003, but is believed to be higher now.


Low Call Centre Costs.

Seat costs range depending on the call centre service provider and the type of service required. Seat costs range from R60 - R150 per agent per hour. (£6 - £12, $10 - $25). Call centre’s offering low per seat charges will charge performance related fees. The fees are dependent on the product and the value of the product being sold.

Most contracts exclude call costs. Despite there being a drop in international calling tariffs, telecom costs remain high in South Africa. Call costs range from R0.45c to R2.00 per minute (4p – 18p, $0.08 - $0.33) and are dependent on volume and destination country. Mobile phone calls are more expensive.


Great Fluency in English and other major languages

Language can be a key barrier to off-shoring, especially for client facing processes such as customer support. South Africa has 11 official languages, with English being the predominant language used in a commercial context. Afrikaans, a widely spoken language is based on Dutch. Many other foreign languages are spoken in South Africa, such Portuguese, Italian, Greek, French and German.


Skilled Labour Force

South Africa has an economically active population of approximately 16,8million people and an unemployment rate of 31,2% (March 2003, according to Stats SA).

While the population is expected to grow to approximately 44,9million by 2017, the labor force is not projected to grow by much, averaging at 16,8million for the period 2003 to 2017 with 8,4million people in formal employment in 2017 (6,8million of these people being employed in the private sector).

South African’s are perceived as work working and committed.
The South African literacy rate is in the region of 84% (24% higher than that of India). There are approximately 171,000 people graduating from tertiary institutions throughout South Africa every year.

Robust Technical infrastructure

South Africa is ranked 23rd in telecommunications development in the world. The country has approximately 4,92 million installed telephones and 4,3 million installed exchange lines. This represents 39% of the total lines installed in Africa. The network is almost wholly digital. Digital microwave and optical fibre serve as the main transmission media for the inter-primary network, interconnecting all major centres.

Great Cultural fit with US and UK

South Africa has historic trade relationships with many European countries, particularly the UK, Netherlands, France and the US. As a result, South Africa has a strong cultural affinity with these regions. More than 560,000 foreigners visit South Africa yearly for business. More than 1,500 Europeans immigrate to South Africa yearly.

Reasonable Proximity to the US and UK

South Africa is on the same longitude as Europe and has a maximum time difference of 2 hours, depending on the season. South Africa also offers the US a good “time fit” as the East Coast is 6-7 hours behind South Africa and the West Coast is 9-10 hours behind, thus presenting the opportunity of utilising existing South African call centres in their night or “down time” to service the US customer base. These compatible time zones allow for “follow the sun” processing and business continuity support, in conjunction with outsourcers in other countries such as India and the Philippines.

Improved Political stability

According to Control Risk Groups, Risk Roadmap Report 2004, South Africa's business environment is positive, with a low political and security risk. This is further supported by recent large direct investments by foreign companies. Recently Absa Bank, South Africa’s largest retail bank, was bought by UK based Barclay’s Bank. Government has identified the Call Centre industry as a key growth industry and works closely with the private sector to promote and grow the industry.


Beautiful Climate

South Africa’s climate rates as one of the best in the world. This is supported by the large numbers of tourists that visit every year. During summer, temperatures vary from 20 – 35 degrees Celsius, whilst in winter; temperatures can drop to between 5 – 20 degrees.


The above information was compiled from the following public sources:



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