An Increasing number of companies in developed economies are outsourcing IT functions and business processes offshore to companies in developing countries because of the cost advantages.

"SA is well positioned to become the place of choice for offshore outsourcing. We are English-speaking, which is important when it comes to solving customer problems," says Darren Smith, director of operations at Siemens Business Services.

He says SA can compete economically and technologically for offshore outsourcing business in any country in the world. The high cost of telecoms in this country is offset by more favourable labour costs.

For example, the total cost of a skilled call-centre agent in the UK is about £2500 a month, compared with about £500 in SA, due to the exchange rate."We did benchmarking at the end of last year that shows that SA is marginally cheaper than India," says Smith.

As a multinational organisation, SBS is implementing offshore outsourcing centres in many parts of the world and can provide identical services from these through its global delivery backbone, says Smith. "We can take over a user’s PC from anywhere and can escalate a call to an expert in any part of the world."

The company is providing offshore outsourced services to Siemens globally, as well as to Barclays Bank, the UK Passport Agency and Deutsche Bank in Germany, says Smith.

He says SBS is building an infrastructure in the Western Cape to handle offshore outsourcing in SA.

A successful model for such offshore outsourcing is when 80% of the delivery is done locally and 20% is done on the ground in the country where the customer is located, says Jim Kleyn, director of application services at Computer Sciences Corporation (CSC).

"This is a critical element when the customer requirements are not static."

CSC is providing offshore SAP application support services to Anglian Water, a UK utility, where the majority of the support work is delivered from SA.

A team of staff on the helpdesk in the UK logs customer problems, queries and requests in a queue.

The calls are transferred to the South African team, who in effect become an extension of the UK support centre.

CSC is also providing global followthe-sun outsourcing services, in which the local team plays a role. In this case, the South African team would typically take over support from a team in Australia or other parts of Australasia in the morning as they are finishing their day.

At the end of the day they hand over to a team in South America or the US.

SA has the advantage of its English- language capabilities and its affinity to European culture, as well as the work discipline of its system developers and their ability to align themselves quickly to documented processes, says Kleyn.

Kleyn says South African companies are not yet outsourcing IT functions offshore.

However, they may well do so if local outsource providers cannot reduce unit costs enough to meet those customers expectations.

Business Day