Countries that receive digital work from South Africa

Of the work outsourced internationally, most of it (35%) is offshored to India. This is not altogether surprising, given that India has established itself as a centre of excellence in the digital and IT-enablement space. The United States is the next source of outsourced digital/ICT work (at 26%) and this may be where South African organisations require pioneering innovation or the skill sets of IT experts in hubs such as Silicon Valley. The United Kingdom (20%), Eastern Europe (14%) and China (5%) are other countries tapped as cheaper resource/skills markets for digital and ICT work.  

Type of digital work outsourced to China, Eastern Europe, India, the UK and the US

By far the biggest volume of digital work is outsourced to India which provides significant skills in ‘Application and Software Development’ and ‘Big Data’. As such, the IT hub of Bangalore, which is a global centre for ICT outsourcing and IT-enabled services, provides compelling cost, skills and talent advantages to South African organisations backed by a workforce of over 1.1 million people and labour cost differentials of between 20 – 30%.[1]

Eastern Europe (in particular markets such as Bulgaria, Poland and the Czech Republic) provides strong expertise in ‘Application and Software Development’. However a sizeable component of work sent to this market includes next-generational technologies such as ‘Artificial Intelligence’ and ’Blockchain’.

Although the volume of digital work and expertise outsourced to China is relatively small; the content of this expertise relates to frontline solutions in areas such as the ‘Internet of Things (IoT)’, ‘Machine Learning and ‘Artificial Intelligence’. This predominatly sits within retail, government and banking services. As such, China’s digital economy accounts for 40% of the value of global e-commerce transactions and 70% of total fintech global valuations. The country also boasts tech giants providing IoT and smart city services.[2]

Digital work sent to the UK would generally be more expensive to offshore and consequently there are compelling proficiency-innovation reasons to outsource to this market. Respondents look to the UK for skills in ‘Application Development’ and ‘Software Development’ which would be in highly specialised, niche areas. The appeal to send ‘Cloud Computing’ work to the UK may well include a shared regulatory environment and that these skills are more adept/deeper in the UK than the availability of similar local skills.

Similarly, US expertise is sought after for distinct functions of digital and ICT work. Although outsourcing ‘Application Development’ work is significant, it is equally as valued as ‘Big Data’, ‘Software Development’ and ‘Data Science’. There is also an interesting spread of highly specialised, next-generational work sent to the US in areas such as ‘Blockchain, ‘Biotech’ and ‘Quantum Computing’. These are pioneering, frontline proficiencies which are difficult to source locally.

[1] Source: 2020 Knowledge Executive Global Business Services Buyers Guide and Investment Survey

[2] ICT and Digital Economy Masterplan for South Africa | 2020