Reduce costs by Outsourcing to South Africa

Jun 20, 2022 | Blog

, Reduce costs by Outsourcing to South AfricaFor many years, there were as many young South African Accountants working abroad straight after completing their articles as there were Australians and New Zealanders. They were commonly known as SAFFERS, recognized for their strong work ethic, quality education and ability to converse in English without much of an accent.

Then came the 1994 changes in regime in South Africa and with it a change in policy regarding issuing of visas. Greater emphasis was placed on preserving the working relationship for South Africans in South Africa by introducing far more stringent criteria for foreigners to work in SA. Whilst I am no specialist in the visa regulation process, it is my understanding that this brought on a retaliation by countries such as the UK in applying similar criteria to South Africans working in the UK. These regulations effectively stemmed the flow of young SA Accountants taking a 2 year working holiday abroad, unless they had access to the option of an Ancestorial visa.

It has only been since the outbreak of Covid that there has been a realization that people can be effective when they are not working in the same office. This leads on to questioning why they have to even be in the same city or country. As a result, the number of people working fully remotely has increased dramatically.  The rest of the world has realized that they can now hire a decent skill, without a sharp accent, from a like minded upbringing at a much lower cost.

A practical example of this is in the Audit space. Whilst the Big 4 have always had a very strong secondment program for their article clerks finishing their Articles, two specialist recruitment firm suddenly emerged specifically to source talent to work in various countries around the world, mainly for what we know as “second tier” auditing firms. These resources worked on a contract basis when the demand was high. Last December, one of these firms had a mandate for 750 people. Whilst the resource is often working long hours remotely in the time zone of the country for whom they are appointed, the remuneration is significantly higher and thus they are willing to endure the inconvenience.

This has resulted in a lack of talent for the SA market. The price of a new qualified CA finishing Articles jumped from around R450,000 pa to >R650,000 pa very sharply.  There was simply more demand than supply. SA companies were forced to but, in most cases, were unable to match the foreign salaries. Many of the initial foreign working assignments are coming to an end and some resources are finding the diverse working conditions too onerous in the long term. With more candidates returning to the SA workplace, it will increase the supply, but also created a new challenge in asking a resource earning a higher remuneration to reduce their remuneration to achieve parity in the market.

If you are looking at outsourcing elements of your finance to a more cost effective region, check out the link below.

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