the dti: BPO, the South African solution - BPeSA
India and the Philippines are the most popular destinations for back-office and call-centre business process outsourcing (BPO) for the financial services industry. But while low costs make them attractive to foreign investors, service quality is limited by cultural and linguistic barriers, as well as a lack of available financial expertise.
South Africa's strong European ties and strength in the financial sector allow it to overcome these setbacks, offering a superior service that covers both areas, though at a slightly higher cost.
"We won't compete with India or the Philippines in purely behind-the-scenes administration duties," says Gareth Pritchard, CEO of BPeSA, a South African industry body working in partnership with the Department of Trade and Industry (dti). "Our strength is when back-office work is combined with the customer-experience element, when familiarity with the product and client empathy are in the foreground."
South Africa/Asia: complementary expertise
A factor that puts South Africa ahead of its Asian counterparts for customer experience is the cultural affinity it has with Europe, allowing workers to establish the rapport that is so vital to quality service. The South African accent is also reputedly preferable to the Indian, which no amount of 'voice neutralisation' coaching seems able to overcome.
Another plus is that South African staff actively enjoy going off-script to resolve customer issues - one of the most common criticisms levelled at Asian call centres.
"We recently held a conference where British clients compared customer experience and the level of service of ourselves with competitor locations," says Pritchard. "The basic message was that experience here is at least as good, if not better, than anything experienced elsewhere - and that includes call centres in the UK."
In terms of financial expertise, South Africa is also ahead of the competition. The World Economic Forum ranks it third out of 142 countries for the availability of financial services, second for soundness of banks and efficiency of corporate boards, and top for strength of auditing and reporting standards, and regulation of security exchanges.
"The other thing to remember about South Africa, is that if a European were to go into a bank here, they'd be comfortable with the environment," says Pritchard. "We've got similar data protection laws to the European Union, and our own equivalent of the FSA, the FSB, ensures that only qualified personnel are allowed to work in a financial services environment."
These similarities allow for an easy transition between European and South African legislation and security laws. From a customer service perspective, they also mean South African workers have an intrinsic understanding of the level of service European customers expect.
Despite these strong selling points, Pritchard does not expect South Africa to pilfer large amounts of business from India and the Philippines: it's more a question of quality over quantity.
"We have NASSCOM [the Indian industry association for IT BPO] visiting Cape Town soon, and we'll be mostly talking to them about how we can complement and fill any gaps these larger locations are offering", he says.
"We will be taking small, niche amounts of work from them, but I don't think it's going to dent the overall growth in their countries. We have a target of creating an additional 30,000 offshore jobs with the dti over the next three years."
dti's financial incentives
In a further bid to attract foreign investment, South Africa's dti is offering business facilitation and financial incentives to companies willing to outsource to the country, payable directly to the employer.
"The dti offers an incentive of R104,000 (€9,100) for every job that's created and sustained over a three-year period for the dti funding year 2012/13, and R88,000 for the 2013/14 financial year, with a bonus for over 400 jobs," says Pritchard.
Two international banks have established shared services centres in South Africa. "This further reinforces the South African BPO offering," says Dean Hoff, director-services at the investment promotion unit at the dti.
These generous financial incentives are a strong reminder that although South Africa is a little more expensive than the lower-cost Asian competition, the differences are marginal. The real disparity lies in the quality of all-round customer service on offer. When judged on this alone, South Africa becomes the obvious choice.