Esethu Dywili credits his successful accountancy career with providing him the means to significantly improve his family’s quality of life.
The 31-year-old has spent several years contributing to South Africa’s rapidly expanding outsourced financial services sector.
An outsourced services company is typically located in a developing nation and performs tasks for other businesses, often large corporations based in Europe and North America.
Examples include call centers in the Philippines, IT operations in India, and South African firms specializing in auditing and other financial services.
As of 2022, Mr. Dywili had earned sufficient income to construct a new residence for his parents and siblings in their village in the Eastern Cape province, an 11-hour drive from his current residence in Johannesburg.
“Working for a company that generates revenue in US dollars or British pounds allows them to offer competitive salaries that may not be available at local South African companies,” says Mr. Dywili, who holds a degree in commerce and accounting.
Building a career in South Africa’s thriving outsourced services industry is a notable achievement, particularly considering the nation’s unemployment rate of approximately 33%, which ranks among the highest globally.
South Africa’s growing appeal as an outsourcing hub stems from several factors. Companies in countries like the UK have been relocating operations abroad to reduce costs and address a reported shortage of available staff in sectors such as accountancy.
With salaries in South Africa approximately half those in the UK, the country’s outsourced services industry has carved out a niche in financial services, IT and software development, data analytics, and digital marketing.
English language proficiency, a high level of education, and a minimal time difference with the UK are also attractive to major companies.
“There is a strong work ethic in South Africa, and South Africans possess a unique energy,” notes Simon Wheeler, a Durban-based chartered accountant also working in the sector.
“We are driven and dedicated, giving 110% to every endeavor. South Africans are seizing these opportunities and maximizing their potential.”
“This provides the chance to elevate their careers and gain international experience while remaining in the country, as traditionally, relocation was necessary to acquire such exposure.”
The outsourcing sector now contributes 35 billion rand ($2 billion; £1.5 billion) annually to the South African economy, according to figures from the Western Cape regional government.
Nezaam Joseph, chief director in the Department of Economic Development for the Western Cape government, where approximately 60 outsourcing firms are located, states that the department has been an early supporter of the sector.
Approximately six years ago, the department initiated a subsidized training program, offering outsourced services firms in the province 3,500 South African rand per month for approximately 4,500 individuals annually. It reports that approximately 80% of participants have been hired full-time by these firms.
Mr. Joseph estimates that over 70,000 people are currently employed in the Cape to meet the outsourced needs of international companies. “We added approximately 10,000 jobs last year, and another 10,000 plus this year. Fifteen years ago, we had fewer than 2,000 offshore jobs.”
UK accountancy firm Cooper Parry is one British company that has outsourced work to South Africa, engaging South African outsourcing finance firms Makosi and PKF Octagon to fill hundreds of positions during the Covid-19 pandemic.
Gemma Edwards, a partner at Cooper Parry and its head of transformation and business services, states that the company was so impressed with its South African partners that it recently established its own office in the country. This office now employs 60 team members, including both Mr. Dywili and Mr. Wheeler.
Ms. Edwards notes that the South African employees “have become an extension of our UK teams.” She adds, “They participate in the same calls as us…it is not ‘them and us’ – we are one global team.”
UK call center firm Ventrica, which partners with brands such as Clarks and McDonald’s, launched an operation in South Africa in 2022. Approximately 30% of its workforce is now based there, with plans to increase this to 40%.
Ventrica’s chief executive, Iain Banks, indicates that its cost-conscious clients are comfortable with their call center operations being based in South Africa, while others believe it is safer for their business to remain in the UK.
“For example, there is an FMCG [fast-moving consumer goods] brand with whom we work,” says Mr. Banks. “If I were to initiate a conversation about South Africa, they would immediately cease the engagement.”
This perspective may evolve, however, as more highly educated South Africans enter the industry. Mr. Joseph anticipates this, as the Western Cape government plans to collaborate more closely with universities to align curriculums with the needs of outsourcing industry employers.
However, Jee-A van der Linde, a Cape Town-based senior economist, expresses concern that, despite these ambitions, the South African education system will not be able to keep pace with the outsourcing industry’s growth, both in size and in importance to the country.
“The quality of education, from a social perspective, is one of the most significant impediments to the South African economy and a major contributor to the skills deficit in South Africa,” he states.
He also expresses concern that opportunities within the South African outsourcing industry are not being distributed equitably across the country. While many jobs could be performed remotely, unstable internet connections in rural areas would preclude this.
“South Africa is a relatively large country,” adds Mr. van der Linde. “There are major hubs such as Johannesburg and Durban, but disparities exist in how different parties govern different provinces, with some adopting a more business-friendly approach.”
“Given these disparities, an imbalance in how the outsourcing industry impacts unemployment across the entire country is likely.”
However, if the Western Cape government’s university collaboration strategy proves successful, it will not only generate more jobs but also likely increase salaries. What will happen then to the companies that rely on South Africa’s cost-effectiveness?
They will look further across Africa, predicts Ventrica’s Mr. Banks, who notes that outsourcing industries are already emerging in Kenya, Ethiopia, Ghana, and Nigeria.
“It began with India as the initial offshoring location,” says Mr. Banks. “It then shifted to the Philippines, and now South Africa is experiencing a boom. However, South Africa will eventually reach a peak, and the industry will need to identify another location, which appears to be elsewhere in Africa.”
In the interim, Mr. Dywili states that the opportunities in South Africa’s sector provide a palpable, albeit rare, sense of optimism for young people in the country.
“Young people have felt demoralized by the limited opportunities available in South Africa,” he says. Mr. Dywili adds that more are choosing to pursue degrees such as in accountancy that offer a pathway to employment in the outsourcing industry.
Tech firms are developing more affordable ways to detect and destroy drones.
Fixtures, results and scorecards from South Africa’s tour of Pakistan, featuring two Tests, three ODIs and three Twenty20 internationals.
The tech giant also announced a new robotic arm and an AI tool to improve efficiency at its warehouses.
Elon Musk’s electric car maker reported record revenue as US buyers rushed to secure a key tax credit.
UK’s ad watchdog warns the betting companies not to include any character who has a strong appeal to viewers under the age of 18.