This is a question I think I get asked at least once a week and it's an evolving picture, the answer I would give today is quite different than it was three years ago, entirely different from five years ago and unrecognisable to when I brought my first contact centre to Cape Town almost ten years ago.
The answers I hear from this question from clients and outsourcers alike also varies wildly and is often more biased to where they're already based (or have empty space) rather than whether it's the best fit for the work type or even for the type of client. Clients will generally be looking for comfort that they did the right thing and aren't missing out on a better location. I can say this because I would be lying if I said I hadn't done both of those things. I exalted over how Cape Town was the obvious choice for me as a client and then later as a supplier, "nudged" my clients towards a particular city because I might just have an empty spot that would work for them.
However, the truth is that the three major BPO destinations in South Africa; Cape Town, Johannesburg & Durban, even now, have unique strengths that can be leveraged BUT the commonly used throw away comments about the negatives of each are now antiquated and more used to deter clients away from areas that the "naysayer" can't service or has a high cost base relative to his or her competition.
Let's do a little mythbusting shall we:
Cape Town
The Mother City as it's fondly known simply sells itself, it's a beautiful coastal city with a cosmopolitan and progressive feel. It boasts one of the wonders of the natural world with Table Mountain and is jam packed with vineyards, great restaurants and 300 days of sunshine at a comfortable 20C - 30C. The people are friendly, the conversational English is great and the accent is distinctly South African but softer than most cities which makes it harder to pin down (International contact centre customers often find it hard to place and often think it has a mediterranean sound). Education levels are good and there is strong backing from local government (Government is regionalised in South Africa, similar to The UK)
However, if someone doesn't want you to be in Cape Town, the myths you will here are:
Cape Town is saturated, too much competition for staff, the attrition is horrendous! - Partially True. - Attrition is generally slightly high in Cape Town but it is relative and varies wildly based on the work type. There is no major skill shortage in the BPO industry and there is great government backed schemes to get relevant skills in place to meet demand in things like data science and digital contact centres so Cape Town is working hard to be future ready and resilient. Attrition averages (median contact centre work) around 40% - 50% (pre-COVID) which is a major uplift to say, the UK, where attrition can be single digit without huge amounts of effort. The BPO providers have spent millions adapting to this environment and have controls to protect client performance and ensure delivery even with these kinds of attrition and recruitment backfill requirements.
Cape Town is just for Customer Service, it won't work for other work like sales or debt collections. - False - If I wanted to do an outbound sales campaign out of South Africa i wouldn't choose Cape Town to do it in, but that's not because Cape Town agents can't sell, it's because Durban agents can sell better, we'll get to that a little later. However, in contrast, International debt collection works incredibly well in Cape Town and it is because of the Cape Town agent's ability to build rapport using empathy but be confident enough to still ask for the money (which in my experience is where collections in the UK are often a challenge)
Cape Town is more expensive, Capetonians are too laid back so productivity is low - Mostly False - Based on the average productive hour charge, which is how most international clients pay, Cape Town is generally around 10% more expensive than Durban and Johannesburg. Why? Cost of living, particularly property, is a bit more expensive in Cape Town, it is a tourist destination so inner-city living is out of reach for most agents so that also makes transport a bigger portion of agent salary. And finally, there are more global BPO players based in Cape Town and less independent owner-operated BPOs and simply, they have higher costs and shareholders to answer to. It is however nonsense that Cape Town agents work any less hard than other regions.
Durban
Durban in Kwazulu-Natal (KZN) is also a coastal city but is less densely populated than Cape Town. Durban has the largest population of people from Indian descent outside of India and that is evident in it's cuisine. The Durban Curry and Bunny Chow (a hollowed out bread loaf filled with hot curry) are a sought after delicacy throughout SA. Interestingly, the BPO industry has made its home outside of the Durban Central Business District and chosen to group together in the affluent district of Umhlanga (Pronounced: Umshlanga) which has a vibrant holiday feel about it and boasts one of the biggest shopping malls in all of South Africa. The work ethic in Durban is strong which has made it the preferred BPO destination of choice for sales activity.
Popular myths about Durban include:
You can't get good management talent in Durban - False - Durban was probably the last of the three cities to really break out in the BPO industry. Certainly in Contact Centres, experience is everything so it would have been true at one stage that there was more experience and therefore more management talent in other areas but that simply doesn't hold true today, in fact, as some of the toughest contact centre work is done out of Durban e.g. outbound telemarketing, strong leadership for that kind of work is in short supply now in the other regions.
International Customer Service won't work in Durban - False - In recent times we've seen some iconic customer-centric brands, particularly from the UK choose Durban as their BPO home. We've also seen a number of energy companies expand into Durban to give the additional business continuity outside of the energy & utilities BPO hub that already existed in Cape Town.
It's hard to get to for clients - False - This once was a genuine concern for international clients looking for an SA location to outsource to. There was no direct flight from the UK to Durban and it was necessary to traverse through Jo'burg or Cape Town which added to client costs and gave Durban an extra hurdle on attracting customers. Now with regular direct flights in to Durban from several major airlines including BA and Emirates, this is an outdated myth.
Johannesburg
Jo'burg or Jozi as it's more commonly known is the finance, travel and business hub of South Africa and whilst South Africa actually has three capital cities (Pretoria, Cape Town and Bloemfontein) you would be surprised to find that Jo'burg feels more like a capital city than any of them. Jo'burg is fast paced, bustling and vibrant and most residents consider Cape Town to be laid back almost to the point of laziness. If you want to make your fortune in South Africa and do it quickly, you go live in Jo'burg. As a BPO destination Jo'burg has found it's niche in the finance, insurance, healthcare industries and has good access to talent especially where there is a requirement for agents to be multi-lingual. Like Durban, big business has slowly moved away from the crowded city centre and congregated in the upmarket Sandton area, the BPO market has even spread out as far as Centurion and Pretoria to access more skills which while technically is not then Jo'burg, it is nearby and still in the province of Gauteng.
Discouraging myths about Johannesburg include:
Jo'Burg isn't suitable for international BPO - False - Jo'burg has the same access to talent as the other cities and may even have the edge on access to high end skill like actuaries or chartered accountants. If you have high value work or complex processes like finance & accounting or Legal processes, there is a strong argument that Johannesburg should be your destination of choice. I think the truth here (and I feel I can say this as I used to be an International Client to SA) is that Cape Town and Durban are just prettier to look at with their golden beaches and holiday feel, that most international decision makers give that more weighting in their decision making than maybe they ought to (there, I said it!).
It's not safe to walk the streets - Partially True - It is an unfortunate reality that South Africa's crime rate is higher than most countries and one is required to know which areas are safe and unsafe to travel in unaccompanied. Jo'burg has gained this reputation in BPO due to most BPO's starting out in the Central Business District which has unfortunately become a less safe area (like so many other major cities around the world). However, BPO's are a resilient and adaptive bunch and most have relocated to more secure areas as mentioned above or have the necessary security controls in place to underwrite client safety. It is an unfortunate perception that many international BPO clients have from the past that is proving hard to shake for Jozi.
The Jo'burg accent is harder to understand for international clients - False - Accent is a sensitive topic and there is continuous debate in the offshore BPO community on whether it ever was really an issue or is just a hangover from the earliest days of offshoring in India where poorly trained agents who had never been out of their country or used the products they were supporting let alone have the advanced cultural awareness training that exists today, slowly drove international customers to insanity when the process documents they used didn't match to the customer's question. Due to the difference in demographics between Jo'burg, Cape Town and Durban it would be fair to say the other locations have more neutrality in the accent of the standard call centre agent but in this digital global community we live in, we believe there is less intolerance now to hearing a foreign accent and what is important is the conversational skills of the individual and their level of competence. As with most things, it comes back to to the work type and client brand. If I was outbound selling American flags and apple pies to customers in Texas, it would probably be a consideration for me, beyond that, non issue.
Conclusion
So which is the best city for international clients to outsource to?
It entirely depends on the work type. It is true that each city is different and also true that each city is better at certain work than others, but what isn't true is that there is a major city in South Africa where you can't make it work. As a client you need to work with your BPO provider to build something that works for you and if they're a good partner, they'll advise you how and more importantly where to put it. It really comes down to why you're offshoring your work; is it simply to get the lowest cost per transaction you can? To deliver the same service but at a reduced cost? Or to get access to talent that you can't get or can't afford at home e.g. Data Scientists, Actuaries or IT Professionals? Whatever your reason, there is a recipe to achieving a successful outcome and in South Africa and location is and will continue to be a consideration.
What we do know is that with BPO client cost savings now exceeding more than 50% in all South African cities, there has never been a better time to outsource to South Africa.
If you're thinking of offshoring to South Africa, are already here and need some advice or simply want to pick the brains of a group of experts who have been on your side of the fence as well as on the supplier side, why not book a free consultation with BPM Advice to see how we add value to your organization.
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