Can Rural Outsourcing Change The Unemployment Figures In South Africa?

South Africa. Image Source

Business Process Outsourcing has been a key player in the Indian economy for more than a decade now. Despite the obvious lack of physical infrastructure, the business model has thus far capitalized solely on talent and language skills. With India reaching the forefront of the world’s BPO domain, one cannot help but ask if the business model is the answer to unemployment in infrastructure poor areas across the world.

The Indian BPO industry according to an article published in the wall street journal by Dhanya Ann Thoppil is expanding out of the cities in to the rural areas. The lack of physical infrastructure such as highways, consistent water supply, electricity and internet connections slows progress down in rural areas.

The outsourcing model has changed the only rule of economy there was. Macro-infrastructure would lead to micro-infrastructure development. A clever use of the available infrastructure lead India towards a micro-infrastructure success.

The educated, skilled, experienced and most importantly English speaking employee base gave India an edge in the business model of exporting customer services. From retail solutions to financial services, India has covered nearly every base there is in the services export model.

South African Outsourcing Industry

South Africa is similar in numerous ways to India with a severe, apparent lack of infrastructure and an educated, English speaking employee base. Can outsourcing provide employment to South Africa’s rural population the same way it has in India? The answer lies in an examination of the South African scenario.

The idea of employing rural South African population is not new. President Mbeki announced in 2006, a plan to employ 30,000 South African citizens in 10 rural contact centers. The plan was intended as a push to get South Africa recognition as a world leader in the outsourcing arena within the next decade.

The government’s promises failed for a variety of reasons. The intention behind the plan however caught on. Despite a couple of setbacks, outsourcing in South Africa has become a viable business option.

The running costs, including electricity and internet, are relatively high and therefore the entire cost of the operation gets driven up. On the other side, a relatively neutral accent when speaking English has worked in favor of the rural South African population. Further, a large scale affinity for the western culture and way of life spurs on the need to emulate or ape their culture, a bonus in the outsourcing arena.

Even in India the outsourcing industry is quickly moving toward the only untapped potential, the rural talent pool. While migrating to the urban areas for work is commonplace, there are a lot of people who do not leave their rural hometowns and give up their close family bonds.

Rural Shores business Pvt. Ltd., is one of the pioneers of the rural business model. Murali Vullaganti, the founder of rural shores business believes that businesses like his own spread the benefits of moving to the untouched rural areas. He was quoted as saying, “The impressive economic progress India is experiencing today is only limited to the urban areas and benefiting the middle class and above.” What Murali Vullaganti was insinuating was that the rural poor are not benefitting from the supposed economic boom that centers in the thriving metropolis.

Training is the core process in companies that offer services, especially services concerning the voice segment. Employee retention is far higher in the villages and towns where people are not likely to company hop.

Further the employees will probably never have to worry about the urban problems of rent and crowding. On the flipside, however, power and infrastructure issues are far more of a looming issue.

The same issues that the Indian rural areas face echo in the rural areas of South Africa. Their economy is based either wholly or partially on agriculture and mining. The wages that the industries pay are however abysmally low and insufficient. The positive aspects to setting up a company is rural South Africa as against India is the regular and reliable power supply and internet connection although it comes at a higher cost.

Rural outsourcing is also gathering speed as it offers gainful employment without uprooting people. It defers the rural brain drain while enhancing the quality of life through employment. It gives the rural population a chance to maintain their own standard of living. The idea has been variously termed as socially responsible outsourcing, fair trade for outsourcing, sustainable socially responsible sourcing (SSS) and ITES 3.0 (third wave of ICT enabled services).

The socially responsible factor can be called in for questioning as the rural salaries are not comparable even by a far stretch of imagination to the urban salaries in the same sector. It is surprising that major companies have not yet fully realized the cost cutting potential of investing in rural areas.

Samasource, a company based in San Francisco, empowers employees to work for first world clients from anywhere in the world. The digital work that this company does is benefitting scores of rural women who can now materially support their families and stay close to them. Their spouses also can get gainful employment and not leave for the city.

A similar operation in India is the Source for Change, an all-woman operation based in Rajasthan. They seek to empower women, bolster and support a higher social standing. Corporations like Tata consultancy made a similar move to establish operations in rural areas.

Karoo has a multi-billion dollar industry being set up. The SKA telescopes that are being installed in Karoo will require telecommunication infrastructure. The scenario is ripe for BPO picking. With the infrastructure in place, companies can flourish in Karoo.

The voice segment of outsourcing seems to be tailor made for the South African rural scenario. With the least amount of infrastructure, services can be rendered through contact centers. Areas with dense technical talent are perfectly suited to sourcing services of a more technical, clerical or financial nature.

South Africa therefore has the potential to rule the world of Business Process Outsourcing, and it is poised at the edge of the domain. Given the fact that companies are moving to rural India and sustaining there despite the obvious lack of physical infrastructure, it may only be a matter of time before South Africa follows suit.

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