South African efforts to boost its presence as an attractive IT outsourcing partner appear to be bearing fruit, with a reported 300% increase in queries from European companies seeking partners in SA.
Local companies report increased interest from abroad, supported by government departments such as the Department of Trade and Industry, which recently sent a trade mission to the US in a bid to boost interest in partnerships.
Trade and industry minister Alec Erwin carried out a "successful" visit to the US earlier this month, to promote IT opportunities in SA. Among other things, Erwin highlighted SA`s ability to provide back-office functions like data capture and front-office functions like call centres.
Erwin said on his return that US businesses had shown a great deal of interest in doing business with SA. He said SA is seen as an up-and-coming destination, offering sophisticated service in call centres, finance and project management.
The department hopes to create 100 000 jobs by 2005 through call centres, which are between 30% to 35% cheaper here as opposed to the US because of lower labour costs.
According to Mike Sewell, group executive of managed services at Comparex Africa, the number of requests from European companies seeking IT partners in SA has grown 300% in three years.
"The favourable rand/euro exchange rate could turn SA into the outsourcing destination for the world. European companies are increasingly looking to SA to supply world-class IT outsourcing skills at extremely competitive rates. Factors that have influenced this include the quality of service and skills available locally, the relatively low cost base, the favourable exchange rate and the similar time zones between Africa and Europe."
Sewell says SA is increasingly being considered ahead of India for work in applications development. "The gap between the billing rates for India and for SA has narrowed, which has led to European companies seeing SA as a serious competitor in the offshore outsourcing space."
Org Geldenhuys, director of Pretoria-based Abacus Recruitment, adds that in his experience, there is also a growing trend for US and UK companies to outsource software development and support work to local companies because of the relativity of the weak exchange rate against the pound and dollar.
"Even though the rand has strengthened, we are seeing a growing number of overseas companies doing software development via local companies because the costs are reduced by at least 30%," he says.
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