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Outsourcing is good for job creation in South Africa

The rise of the 'as-a-service' economy 

South Africa has identified BPO/Outsourcing (Business Process Outsourcing) as an enabler for economic and social growth. Taking examples from countries such as India and Philippines where the industry has had huge success, South Africa is progressing well towards developing its currently nascent BPO/Outsourcing industry. South Africa is emerging as an outsourcing destination with a growing English speaking population, which is qualified and further supported by a time zone that overlaps with most of the regions. Cost savings, revenue-generating services, presence of large outsourcing service providers and buyers, the availability of French, Portuguese, and Dutch speaking talent is also favoring South Africa as the next outsourcing destination for the developed world.

There is always a question in the public domain whether outsourcing creates jobs or destroys them.A simplistic and locally focused perspective will look at outsourcing in isolation and call the movement of jobs from a company to a local outsourcing provider as a loss of jobs. To say a country that allows companies to outsource in order to obtain efficiencies and cost reduction causes job losses is naïve and uninformed. For many companies to survive and continue to employ some people, they need to drive efficiencies and continuously improve their manual ways of doing business. Driving efficiencies could result in job losses, whether improvements are done internally or by an outsourcing provider. Statistically, there are more employees that get retrenched annually because of company failures (mainly where the revenues cannot cover the overheads of that company), than job losses caused by efficiencies through outsourcing. Even trade unions that are more vocal against outsourcing, have asked the question: is it better to retain 100% of company employees for a short while than to sacrifice 15% of employees in order to keep 75% of them through to retirement?

However, a country that is able to import foreign jobs into its shores creates new jobs. Unfortunately it is impossible to have successful professional outsourcing providers at a global level,if the country speaks badly domestically. Successful outsourcing countries have a vibrant domestic outsourcing market that creates talented outsourcing professionals, who become attractive globally.

Unlike minerals, where foreign direct investment comes to get natural gold and platinum under the ground, the services industry needs to be attracted to come to your market, because the only asset you have in the services industry is the availability of talent. Lately, the technology solutions that have differentiated India for decades are now available in the cloud and can be easily accessible in South Africa through viable and affordable broadband infrastructure, which has been significantly improved through the roll-out of the seacom cable.

 

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