Contact centers are a study in change and evolution. Many of the proven processes and cutting-edge technologies we deployed a decade ago are now dated or obsolete. Likewise, the world of contact center outsourcing continues to evolve at a rapid rate. From BPO (business process outsourcing) vendor mergers and acquisitions to the rise of new markets and geographies, the landscape is constantly shifting.
BPO providers typically offer services in three broad geographic categories: onshore (domestic U.S./Canada), nearshore (Latin America, Jamaica), and offshore (India, the Philippines, and beyond). Post-COVID wage inflation has pushed onshore rates so high that domestic outsourcing often provides little to no cost advantage over internal (captive) contact centers. In the nearshore regions, close proximity to the U.S. and a large Spanish-speaking workforce have led to market saturation in some areas. Meanwhile, India and the Philippines, both longtime leaders in global contact center services, are continuing to face challenges related to customer experience (CX), quality and oversaturation at low price points. As a result, BPO firms are increasingly exploring alternative offshore geographies.
Two emerging markets McIntosh clients have recently embraced are South Africa and Pakistan. While neither destination is a short plane ride away from the US, organizations in our network operating in these geographies consistently report that the advantages make the journey worthwhile.
South Africa has established itself as a “rising star” for both front- and back-office BPO services supporting customers in the U.S. and U.K. Most major BPO providers have operations in Cape Town which is a clean, modern, and secure multicultural coastal city. The South African government strongly supports the contact center industry with a robust overall infrastructure. The labor pool is large (with 37% unemployment) and highly proficient in English. Current pricing is roughly 20% lower than many nearshore markets and closely aligns with rates in the Philippines. One of the primary risks lies in the rapid expansion of the sector, which has created high demand for experienced front-line operational leaders; however, this risk is lessening over time as skills sets mature. An additional concern that is also being mitigated is connectivity and “brown outs” as the contact center industry grew at such an accelerated pace. The South African government has responded quickly with expanded, reliable backup generation capabilities that are tested daily.
Pakistan, while less recognized as a “hot” outsourcing destination, has quietly become home to sizable BPO operations for several Fortune 50 companies. English is one of Pakistan’s two official languages, and roughly 49% of its 250 million people are fluent (compared to about 16% in India). Clients report strong results in both speed to competency and quality of customer interactions, with many planning to expand into higher-tier work in the near future. Like South Africa, Pakistan is considered a low-cost geography, offering rates comparable to the Philippines. The main concerns relate to optics and geopolitical perceptions; however, our clients have found the business environment stable and no more volatile than many nearshore markets where outsourcing has long thrived. Limited experience in the front-line leader role is also a factor, but as in South Africa, that risk is one that is mitigated over time.
McIntosh remains vendor-agnostic and does not align with or serve as a broker for any BPO firms. However, we have worked with numerous clients entering these emerging markets (including “boots on the ground” experience in South Africa), and we maintain close visibility into the firms offering services in South Africa and Pakistan. Our sourcing service offerings include the following:
- Assessing the overall contact center outsourcing strategy and operating model, both for companies outsourcing for the first time and experienced buyers of contact center BPO services
- Helping develop and/or manage RFPs for the solicitation of contact center BPO services
- Implementation project management, ongoing vendor analysis and oversight, and/or on-site support in the BPO operation
We would welcome the opportunity to share our insights and experiences with organizations exploring global BPO strategies across these and other geographies.
