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Summary

The analysts, enterprise decision-makers, and outsourcers meeting this week in Cape Town for the Business Process Enablement South Africa (BPeSA) summit are sure to be impressed with the ongoing development of this country as an offshore delivery center. However, in Ovum’s view, BPeSA needs to outline its plans for driving South Africa as a logical alternative for value-added BPO services over the long term.

UK, ANZ should remain main focus for South African offshoring

A successful strategy employed by BPeSA and its members in recent years has been to target the UK, Australia, and New Zealand as demand centers for South African front-office BPO services. By taking advantage of linguistic, cultural, and commercial overlaps between these countries, South Africa has developed a rightly deserved reputation for cost-effective, high-quality voice and non-voice customer experience. This was most recently validated by iiNet’s decision to expand its offshore delivery capacity into Australia at Merchants’ Cape Town facility.

This is not to say that South African-based contact center vendors should limit themselves to UK, Australian, and New Zealand enterprises for offshore contracts; however, new overseas target markets must be analyzed thoroughly and mapped as closely as possible to this (to date) winning formula. The efforts to service the Dutch market by Afrikaans speakers has largely been abandoned by most outsourcers (due to limited linguistic synergies), and while the North American market may offer longer-term potential, this will require a great deal of education for enterprise contact center decision-makers in Canada and the US who may be unaware of South Africa’s track record in this sector.

BPeSA summit needs to chart broader BPO roadmap

Another element that will determine the success of BPeSA’s meetings in Cape Town this week will be the extent to which South Africa is positioning itself in the non-CRM outsourced services market. Among offshore destinations, South Africa ranks as one of the most expensive (according to Ovum’s most recent analysis, CRM Outsourcing Pricing and Cost Analysis, 2014–2015). While delivery of higher-value contact center functions is a solid niche, diversifying its capabilities and leveraging its large and wide skills base will be key to long-term success. For years, the potential for legal process outsourcing has been discussed, given the common law similarities between South Africa and much of the Anglosphere. Considering the level of sophistication among graduates in technology, engineering, healthcare, and commerce, the country also provides possibilities for IT service delivery and back-office processes (such as accounting, procurement, and healthcare). This week’s industry conference should provide attendees with a sense of which value-added services will be emphasized and in what time scales, as well as what investment and support will be forthcoming to help these succeed.

Appendix

Author

Peter Ryan, Principal Analyst, IT Services

peter.ryan@ovum.com

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