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Wednesday, 21 October 2020 16:11

Aussie firms outsourcing IT functions to South Africa amid COVID-19 disruptions


GUEST OPINION by Andy Searle, CEO, Business Process Enabling South AfricaAs Australian companies wrestle with the economic and social impact of the COVID-19 pandemic, many are realising that old ways of operating are no longer an effective approach.

Buffeted by disrupted supply chains, shifts in customer demand, and with staff forced to work remotely, companies are reviewing processes, workflows and the need for innovation in order to successfully adjust to what has become a new normality.

Organisations are facing a need to quickly reduce costs and pivot to adjusted customer demand levels. With revenues significantly down for many enterprises, a failure to dial down operational expenses whilst increasing customer experience will hit the bottom line and could even spell the end of some businesses. Many are eyeing their internal IT departments, digital development partners and their associated costs of operation. They wonder whether savings could be achieved by shifting some or all of the functions to an external outsourcing partner.

However, it’s important that any such change be done without causing any detrimental impact to the organisation’s activities. Any negative impact on projects, core business applications, digital channels and related infrastructure (including cloud-based platforms) could have serious knock-on effects for both staff and customers.

“These challenges are being felt globally and as such, software development firms such as ours are poised to step into this void and ensure the continuation of streamlined business operations,” says Gus Pringle, Director at BBD, a specialist software development firm well-positioned to assist organisations for seamless process and changing customer demands.

The increasing appeal of IT outsourcing

The concept of IT outsourcing and specifically bespoke software development is not new and has been a part of the operational mix within many firms for years. However, the types of activities being outsourced have tended to be relatively low-level in terms of complexity.

This is now changing as firms plan to hand responsibility for more complex tasks over to qualified outsourcing partners. These activities could include everything from network and security functions to software development and system architecture planning.

In the past, many organisations were unwilling to have such activities conducted by teams located outside Australia based on fears associated with the perceived lower quality of service that would be experienced. They may be attracted by the idea of reduced costs, but were not prepared to place responsibility for the activities in the hands of untested, external staff.

Entelect, a global end-to-end technology services business headquartered in Johannesburg, has experience delivering for international customers in Australia, New Zealand, Europe and the US.

“Offshoring complex software development and management functions to South Africa presents a unique value proposition,” says Shashi Hansjee, CEO of Entelect. “Our international customers are successfully benefitting from pricing that is a fraction of their local provider costs due to the low cost of labour in the South African market and a favourable exchange rate, while maintaining all the confidence of high-quality delivery on complex software projects.

“This is because we can offer highly qualified end-to-end software delivery and management teams that have cut their teeth on some of the globe’s most challenging and modern software undertakings that span the entire digital spectrum of skills. It’s also important to us that our global customers enjoy the natural cultural affinity that they experience with their South African counterparts.”

The benefits of South Africa

Historically, IT outsourcing, application development and maintenance has tended to be associated with countries such as India and the Philippines. Established firms with large teams in those locations are regularly called upon to undertake activities such as network and desktop maintenance and support, application maintenance, helpdesk staffing, security monitoring and lower-complexity software development.

Australian organisations have however tended to hold back when considering outsourcing more complex IT activities to these regions. They’re concerned that training, language and cultural differences will result in lower standards than they can achieve in Australia. The onshore challenge however remains a small and increasingly costly pool of ‘’right-fit’’ talent.

For this reason, recent years have seen a growing numbers of Australian and leading global firms considering and practicing application development, digital and related outsourcing of tasks and projects to the robust resources available in South Africa. The market boasts a range of established providers delivering world-class levels of quality and service to organisations operating across a wide variety of business sectors. Furthermore, English is the official and spoken language across all businesses, and there is a very mature banking, insurance and telecoms industry in South Africa.

Pringle reiterates that, “with clients in these sectors around the world, our proven track record for successful delivery means that through our highly qualified teams we can ensure solutions of the highest quality for our clients. These large-scale enterprises choose BBD as their software and digital development partner because of our depth of experience, industry insight and innovative, flexible approach to any business environment.”

Australian firms are increasingly considering South Africa as a location for digital design and IT outsourcing on the back of a culture of security and compliance that exists within the country’s broad and deep ICT sector. South Africa was a founding member of the International Organisation for Standards and has its own Bureau of Standard that oversees standardisation and quality in connection with the rendering of services.

In addition, South African software development companies are extremely well versed in the application of different software development methodologies including Agile approaches such as Scrum, SAFe and Kanban. Moreover, they have many years’ experience (over three decades in some cases), in running large-scale development projects using more traditional methodologies such as Waterfall and Prince2. Service quality is of the highest order and world-class in terms of the successful delivery of software development projects enabled by over 100,000 software engineers in the country.

There are a number of barriers to making your offshore partnership work well in many parts of the world,” says Hansjee. “Divided teams and cultures, poor collaboration and communication as well as operational process hurdles due to time-zone differences can all threaten the success of these endeavours. Some of these are cultural, and some of them are circumstantial. We have built up a library of practices and tools within Entelect to both advise our customers on how to overcome these challenges, and to ensure that our own international customers go from good to great with their offshore Entelect partnership.”

Factors such as these are making South Africa an increasingly attractive location for outsourced not only business processes, but application development and maintenance, managed cloud services, UX / UI design and development. The exchange rate between the rand and the Australian dollar along with lucrative national government incentives also means services can be delivered far more cost effectively than similar services provided onshore. Industry estimates point to South African operations being at least 30% lower in cost than an equivalent operations in Australia.

With the struggle against pandemic and natural disaster related disruption set to continue for the foreseeable future, those organisations that opt to outsource core application and/or digital innovation development as well as other key IT requirements and delivery to South African partners, may well be better placed beyond 2020 and have a clear advantage over their competitors.

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