British businesses are faced with a range of challenges: soaring energy costs, rising wages, higher national insurance, and an incoming Employment Rights Bill that is only going to make the hiring process more difficult.
Speaking with London Loves Business, The Legends Agency Group CEO, Alex Fenton, revealed why hiring South African talent has become a smarter and more affordable option for British businesses.
“South Africa has emerged as a particularly compelling destination for British firms seeking to escape punitive employment costs,” Alex says. “South African teams typically cost approximately 50% less than UK equivalents, primarily because the cost of living is substantially lower.”
Read the full article on London Loves Business: “Why British firms are being pushed to hire overseas”
Rising energy costs, wages, and national insurance, coupled with the Employment Rights Bill, have put pressure on British businesses. But, there’s more. British businesses also face geopolitical uncertainty, labour shortages, and higher interest rates. Because of this, businesses have started considering more alternative routes.
Offshoring has become a popular option because businesses simply are not able to cover all the additional and growing costs. Large companies, like Amazon, Google, and Netflix, have been known to use international offshore teams, but they are not the only ones. Now we see British small family firms, boutique consultancies, and mid-sized manufacturers exploring these options too. The COVID-19 pandemic has shown the world that remote working works and geography is not much of a barrier anymore. If roles can be filled and fulfilled in overseas countries, more and more British businesses are going to choose that route instead of higher-priced domestic employment due to government policy.
Alex Fenton, who is originally from the UK, is confident in South African talent. "South Africa has emerged as a particularly compelling destination for British firms seeking to escape punitive employment costs," he tells London Loves Business. "The Western Cape alone hosts 60 outsourcing companies employing more than 70,000 people, rising from 2,000 15 years ago."
Alex also explains that, financially, hiring South African talent simply makes sense. South African teams typically cost approximately 50% less than UK equivalents, mainly because the cost of living is substantially lower than in the UK. Additionally, when you add in national insurance contributions and other employment taxes, the percentage increases.
Beyond pure cost savings, there is also a minimal time difference, with South Africa being only one to two hours ahead of the UK. This means that South African staff are able to work daytime working hours and collaborate with UK teams in real-time. Additionally, English is widely spoken and South African’s share a similar approach to communication and client service, which allows for cultural alignment.
Alex mentions how South African talent no longer only has to fill call centre or basic administrative roles. Because South African universities produce graduates with technical and professional skills comparable to those in the UK, UK firms can hire teams in finance, marketing, legal support, software development, and more. The UK government promises to protect UK citizens who fill these roles, but now they are being filled by international talent because of new government employment policies.
In the past year, The Legends Agency has tripled its workforce and placed more than 1,000 South African professionals into roles supporting British companies. Although this has become a popular choice for UK businesses in recent years, it has not come easily. Most UK businesses would prefer to hire locally, to contribute to the British economy and provide opportunities for UK graduates. But seeing that government policy consistently increases the cost of domestic employment through tax hikes and regulatory burdens, firms have been forced to find alternative, more affordable options for survival.
Alex says, “Unless policymakers reckon honestly with these economic realities and recognise that every tax increase has consequences, we risk watching even more opportunities migrate to Cape Town, Durban, and Johannesburg, cities that are increasingly competing with Birmingham, Bristol, and Belfast for Britain’s future.”
The government may claim to be protecting British workers. In practice, its policies are pricing them out of jobs that are increasingly going to overseas competitors instead.
