South Africa's business process outsourcing services sector: Lessons for Western-based client firms

Abstract

Since 2008, South Africa has become one of the world's upcoming offshore destinations for business process outsourcing (BPO), a market estimated to be worth $US 182 billion globally by 2013. Western-based client firms evaluating South Africa as a BPO destination must consider the country's relative value against alternative locations. Client firms also have a number of engagement models from which to choose, inclucling outsourcing, erecting a captive centre, or acquiring an existing BPO business. The research finds that, for the UK, US, and Australian client companies in this study, South Africa's value proposition is not just based on costs as other locations are often cheaper. South Africa's value proposition is about overall economic value, high quality service and staff, strong cultural compatibility, and a favourable time zone. The findings reveal that South Africa complements the global portfolio for Western-based client firms that already have BPO centres in Inclia, the Philippines, and Eastern Europe. Moreover, whether client firms build or buy services from South Africa, the research identifies clistinctive risks that need to be mitigated by investing in and effectively governing the business processes performed offshore. Finally, from the case study research, this article identifies management lessons for leveraging South Africa's identifiable BPO service advantage.