Outsourcing to Southern Africa: Good or Bad?
A growing population of English speakers and an existing population of Dutch, French, and Portuguese speakers, is just one of the reasons that South Africa is emerging as an ideal outsourcing destination for businesses looking to expand. For businesses that wish to outsource some of their work, South Africa presents a wonderful opportunity to save money and increase efficiency.
But is outsourcing good for South Africa?
Is Outsourcing Good for South Africa?
Economists have recently identified business process outsourcing (or BPO, for short) as a potential enabler for significant social and economic growth within the country as a whole, despite the industry currently being in its nascent stages. The problem, however, is whether outsourcing creates or destroys job opportunities.
The Concerns: Job Security, Availability, and Wages
The 'problem' with outsourcing really seems its most pressing when one takes a simplistic and locally-centered point of view. When a company outsources its customer-service department, for example, this may be counted as a loss to the community in which it was placed, but for those who take a 'big picture' perspective, there has been a shift in job localization as opposed to a 'loss' of employment opportunities as a whole. So, for countries that outsource work, there are often concerns about how the removal of jobs will affect the economy in the long-run.
For countries that import this work, so to speak, the concerns often surround concerns about the types of work being outsourced and the potential for the creation of a working-class in poverty as a result of depressed wages. While this has been a problem for certain countries and sectors previously. The outsourcing of clothing manufacturing, for example, has notoriously been connected with poor working conditions and wages for employees in China. The real challenge, therefore, is to create new job opportunities that provide stimulating options and diversity to the economy and people.
The Opportunities: Job Availability, Professionalisation, and the Two-Way Market
Realistically speaking, a country seeking to export its experience, expertise, and labor must already have a healthy domestic economy. Just like any other export product, the success a country experiences as an outsourcing hub is directly related to the quality of the 'product' being sold. In short, outsourcing offers opportunities for the expansion of already thriving industries within South Africa. Furthermore, the addition of outsourced work to the local job market should encourage rather than inhibit the push for professionalization and expansion in other industries. In fact, it could provide opportunities for professionals retrenched as a result of efficiency drives within localized corporations and companies.
Making Outsourced Jobs Work for South Africa
Pragmatically speaking, outsourced work has the potential to be both negative and positive for South Africa, just as actively outsourcing work has the potential to be both beneficial and detrimental for any business. Unethical, revenue-driven, bottom-line focussed business models may yield a short-term boost, but will ultimately lead to depression of wages and a high turnover of both clients and employees.
Approaching outsourced work with a long-term strategy aimed at closing the gap between entry-level outsourced work and professionalized positions, by contrast, promises to be hugely beneficial to the economy. Focussing on closing the gap between low or semi-skilled outsourced jobs, for example, working in a call-center, and professional jobs such as consulting and project management will provide a variety of employment opportunities and prevent the industry from becoming a predominantly low-income niche. If efforts are put into impact sourcing, rebadging, and continual upskilling there is really no reason why an increase in outsourced work should be anything other than overwhelmingly positive for the South African economy.
If South Africa is to take this opportunity and truly excel, it is important that BPO service providers expand beyond their specializations in order to offer a variety of services that are broad and generic enough to initially boost global demand. This will increase regard for South African providers and bring more interest to specialist services, thereby preventing cost pressures and severe competition from established BPO destinations like India and the Philippines.
Balancing Investment and Reward
In short, outsourced work, like any business opportunity, has the potential to offer huge rewards if South African entrepreneurs can walk the line between investing in their staff and services and keeping their eye on the bottom-line. Outsourcing from America and European nations could well prove to be a proverbial pot of gold.