MarkHilary

Why Is Brexit Causing BPO Headaches in Cape Town?

I visited Cape Town and Durban recently as a guest of BPESA (Business Process Enabling South Africa) and attended the South Africa Business Process Management (BPM) Summit. The summit featured local business leaders, industry influencers, and politicians eager to create jobs in South Africa by riding the wave of Business Process Outsourcing (BPO).

The majority of BPO work in South Africa has always been related to serving customers, typically at voice-based contact centres. The South African accent has always been more acceptable to British customers than those from rival markets where offshoring has also become an important part of the service sector. South Africa is diversifying now to offer a wide range of BPO services, but handling customer service still remains an important part of the work being done there.

However, one topic kept coming up time and again during the conference discussions: Brexit. Although South Africa may seem a long way from the June referendum in the UK, most of the offshore customer experience work being performed in South Africa is for British customers. The industry uncertainty around Brexit is causing headaches south of the equator because every business needs the ability to plan for the year ahead. In the current environment business planning for any UK company, that has products or services moving across borders, is almost impossible.

Companies in the UK are freezing budgets for 2017 and scaling back investment plans. This financial freeze will not be permanent, but there are still two more years of negotiation related to Brexit – assuming the current timelines are correct. Based on the government timetable we know about at present, we will not know how the UK can trade with the rest of the world until the spring of 2019 at the earliest. During this time of uncertainty it is logical for executives to reduce all non-essential plans in the UK. For many companies in the UK, the next couple of years will feel like treading water.

The UK accounts for 70% of the international BPO work being performed in South Africa, so it’s no surprise that Brexit has become an important subject in Cape Town. However, the South African plan is to both offer more complex services and to find new customers outside the UK. Many BPO suppliers are already offering more complex legal, insurance, and retail back-office functions – they are moving away from just operating as contact centres.

Australia and the USA were both targeted as key areas for South African suppliers to win more business. The industry in South Africa is first class. The suppliers I have visited are all operating to the highest global standards so they will have no trouble impressing the Americans – if they can refocus their B2B marketing campaigns away from the UK. South Africa has a plan to move beyond focusing on the UK as a primary source of business and this change is a direct result of Brexit.

Managing customer experience is truly a global business today. The uncertainties over Brexit are causing many companies to steer clear of relying on UK business at this time. The exit negotiations will take some time, so there is nothing that can be done other than to mitigate your own business risk; if you rely on clients in the UK then just like the South Africans, it’s time to start looking further afield.