UK firms investing in South Africa outsourcing
A flurry of foreign investment in South Africa's business process outsourcing (BPO) industry, supported by generous government incentives, has underlined the country's growing reputation as a provider of high-quality, medium-cost back-office and contact centre services.
Last week, British company Quindell announced that it had acquired South Africa-based telecoms outsourcing service provider Quintica and its international arm Quintica International.
Quindell said in a statement that the acquisition of Quintica, which has offices in South Africa, Ghana, Nigeria, Kenya, Uganda, Dubai and Abu Dhabi, gave it a platform for expansion into Africa and the Middle East, "where the demand for software and services continues to expand at a rapid rate".
In July, another British outsourcing firm, Capita plc, entered the sub-Saharan African market through the acquisition of South African contact centre solutions business Full Circle for an undisclosed amount.
Capita was reported as saying the acquisition would see it investing R500-million in South Africa over the next three years.
A month prior to that, New York Stock Exchange-listed WNS acquired South African BPO provider Fusion Outsourcing Services for £10-million.
WNS Global Services group CEO Keshav Murugesh echoed a sentiment increasingly heard in the industry when he noted that WNS "currently has several existing clients interested in services being delivered from South Africa to take advantage of [the country's] English language capabilities, rich talent and strong cultural work ethic".
And in January, US-based Interactive Intelligence Group announced that it was acquiring some of the contact centre assets of its South African-based reseller, Atio, in order to set up a Johannesburg office serving the entire sub-Saharan African region.
Interactive Intelligence's statement quoted Birgitta Cederstrom of consultancy Frost & Sullivan as saying that Africa was "increasingly popular as a preferred destination of contact centres … South Africa specifically has been a natural choice for contact centres due to its large and articulate English-speaking population and service-oriented business culture.
"Another strength is its expanding broadband connectivity, thus ensuring that the latest unified communications and collaboration tools will run efficiently."
Adding to South Africa's offering is an incentive from the Department of Trade and Industry (DTI) that makes the country one of the most attractive global locations in terms of cost.
Offering foreign and local companies R112 000 (about £8 300) for every job created and maintained for three years, the incentive reduces the cost of BPO operations in South Africa by up to 20%.
Last September, Trade and Industry Minister Rob Davies said South Africa had already approved grants worth R157.76-million to 10 projects over the next three years under its BPO incentive scheme.