Top 50 Emerging Global Outsourcing Cities - Tholons

Special ReportThe gateway to the global sourcing of IT and BPO servicesService Providers in South AfricaLegal ServicesBusiness ProcessesIT ServicesSource: TholonsLovells, Clifford Chance , Allen & Overly andLinklatersUnisys, Virgin, LufthansaBusiness Connexion, Dimension Data, 3i Solutions,SaratogaMajor outsourcing cities in South AfricaJohannesburgCape TownPort ElizabethDurbanSource: TholonsQuick TakeLocationPopulation 49,052,489Literacy rateUnemployment rateGDP(official exchange rate)Source: CIA Fact Filesing. Entry level BPO salary in Johannesburg can range from$1,000 to $1,100. Cost of an ITO entry level employee canrange anywhere from $1500 to $1,600 monthly compared to$400 to $500 per month in tier-1 Indian cities. BPO in SouthAfrica (including captives) employs just about 30,000 to35,000, in comparison to India’s about 800,000.Investments in outsourcing business in SA does not yieldan optimal return compared to risks, except maybe for apartfrom legal process outsourcing.Southern Africa, at the tip of the continent of Africa87 percent21.7 percent$300.4 billionCost advantage of SouthAfrica over countrieslike India is not favorableto see significantgrowth in outsourcingduring this period ofrecession. However,Call Center (Domesticand International)contributes to about 1percent of the GDPAllan Wattrus, Director, Global Outsourcingand Infrastructure Services,Unisys Africa says, “The diverse backgroundsof people in South Africa, withthe influence of Europe and the UK,provides us with a pool of resourcesthat can deliver services in most languagesfound in our time zone. French,German, Dutch, Italian, Portugueseand Spanish are some examples of thelanguage competencies accessible inaddition to English. Offering multilingualcompetency to more clients isa definite attraction.” He also explainsthat delivering services into close timezones where language and culture aresimilar and the client is looking forservices that are more than just an operatoron the other end of a telephoneis where opportunity exists. Unisys Africa’smain location is in Rivonia nearJohannesburg and has another location in Capetown.SA has a unique time-zone compatibility with Europe.The time zone advantage (GMT +2) with Europe enables it toqualify as an attractive nearshore destination.The major outsourcing cities in the country are Johannesburg,Cape Town, Port Elizabeth and Durban, primarilybecause of their advanced development in the country.According to Tholons, on the other hand, key clientmarkets for SA include the U.S., Canada, Mexico, the U.K.and Western Europe (Germany and Netherlands). Also,the key Captives include Shell, Budget Group (Fusion Outsourcing),Pruhealth, Carphone Warehouse, Virgin, Lufthansa(Global Telesales).Another advantage with SA is a favorableand stable exchange rate versusEuro. In addition, the stable exchangerate ($1 = ZAR 7.1) is a factor that helpsthe country with its macroeconomicattractiveness.Strong government support givenby the SA government is likely to adda lot of value in its outsourcing sector.In 2007, SA government spent 1.1 billionon a BPO support program. Theplan focused on a broad-based marketingstrategy. It included a governmentsupport program that had investmentgrants and training subsidies. A developmentalpricing framework for telecommunicationswas also one of itsfeatures. However, the results for thisplan are still awaited.The overall picture suggests that SAis still growing in terms of an outsourcingdestination though it has exclusivityin some areas. Tholons views that cost advantage of SouthAfrica over countries like India is not favorable to see significantgrowth in outsourcing during this period of recession.However, Call Center (Domestic and International) contributesto about 1 percent of the GDP.46 GlobalServices www. globalservicesmedia.com October 2009GS