While our cricketing relationship may have soured with the South Africans, our business dealings seem to be rising with Australian companies increasingly looking for alternative cheap employment options other than the Philippines.

“For the past 18 months I have been using South Africans in Cape Town to help me with my business here in Australia,” Peter Wilson, founder of The Shopper Collective, says.

Outsourcing data analytics

“I outsource in the area of data analytics. I work with a data scientist for advanced analytics such as segmentation and a team of highly experienced market research professionals. I also have a team of creative people over there, who are highly experienced in retail and shopper marketing, and who have experience working with some of the world’s biggest brands.”

The Shopper Collective converts shopper research into insights and ultimately shopper action. Wilson’s turnover, which is about $300,000 a year, involves only employing contractors when needed. He employs up to eight  contractors in Australia and almost a dozen in South Africa.

“My business structure works well for me because I employ people on contracts when needed,” Wilson says. “Cost efficiencies are the main main reason we hire people in South Africa. The Australian dollar is still comparatively strong against the ZAR (11:1 ratio), which means I can work with a highly skilled and trusted team at less than what I would pay in Australia.

“The time zone works too. I often brief my associates in South Africa mid to late afternoon, and I have responses in my inbox by the time I wake up the next morning. That gives me the opportunity to be always on, even for my small business.

“Finally, culturally, I am dealing with people who largely have English as a first language, and who share similar lifestyle and sporting interests, as the average Australian. The culture of work is also very similar, which helps immensely when close collaboration is necessary.”

South Africa’s transformation

According to Austrade, South Africa has transformed into a sophisticated manufacturing and service-based economy. The services industry comprises about two-thirds of the country’s GDP, while the mining and agricultural sectors now contribute around 6 per cent to GDP.

“It’s my belief that a lot of the businesses that moved their activity to the Philippines for a significant cost saving are now concerned by their customer dissatisfaction,” Darren Lord, chief executive officer of The Smart Group, says.

“They are now looking for a better option but bringing the work back into Australia isn’t an option because it would double their budget for this operation, which a lot of businesses can’t fund.”

The Smart Group, which is based in Richmond, Melbourne, specialises in sales servicing inbound and outbound contact centre activity across residential and business sales. Its turnover is in ‘the millions of dollars’ and The Smart Group employs more than 100 staff in Australia and  more than 30 employees in South Africa.

“We have moved our sales manager and compliance manager to Durban to operate on the ground and mirror our Australian operation and we have established a purpose-built facility in partnership with Dimension Data in Durban,” Lord says.

“For clients who are currently using other offshore locations but their customers are frustrated with the experience, South Africa provides a more suitable experience to that of Australia but at 45 per cent of the Australian costs,” he says.

Setting up a business in South Africa

Establishing a business in South Africa is relatively easy after the introduction of a new company law, which eliminated the requirement to reserve a company name and simplified the incorporation documents. The new Companies Act 2008 of South Africa requires the Notice of Incorporation and the Memorandum of Incorporation must be lodged at the Companies and Intellectual Property Commission upon registration.

“We now have 34 Australian companies who have invested in South Africa according to the Foreign Direct Investments markets database,” says Dean Hoff, director of South Africa’s Department of Trade and industry.

“Australian companies gain market access to the South African population of approximately 60 million people; favourable labour costs, a gateway into the African continent in terms of corporate headquarters, logistics and experience of doing business on the continent, as well as access to a skilful talent pool.

“There are also common legal and financial frameworks to that of Australia coupled with a range of trade agreements.”

The South African government has established Invest South Africa, which is a division of the Department of Trade and Industry, created as a dedicated public-private sector partnership. It provides investment promotion, facilitation and aftercare to fast-track projects, while also reducing government red tape.

Services include assistance with location scouting, introductions to relevant stakeholders such as other government departments (by way of example the Department of Labour has a list of unemployed people seeking work), introduction to financial institutions, incentive facilitation, as well as visa facilitation.

“Outsourcing to South Africa has resulted in improvements in business performance for numerous Matchboard clients,” Sharon Melamed, founder of Matchboard says.

Matchboard is a business-matching website that specialises in outsourcing services. Through the platform, companies are matched with suitable suppliers, resulting in around $8 million in deals invoiced in 2017. Matchboard takes a success fee, amounting to just under $500,000 last year.

“Benefits include better customer experience because clients can afford to offer 24-hour service seven days a week; lower cost to acquire a new customer; and better service because customers aren’t kept waiting as long, as clients can afford to staff more generously in a lower cost destination such as South Africa,” Melamed says.

“Durban is a centre of excellence for sales and retention work, while Cape Town is traditionally better suited to multilingual – mainly European language – and customer service work.”

Published 2018 | The Sydney Morning Herald by Louis White