Nearshore Americas

Breakdown: South Africa v. Philippines, An Epic Clash With Global Implications

When it comes to global BPO leadership,  South Africa and the Philippines have cultivated a rivalry that is not only interesting to watch but also a harbinger of why the race for global services supremacy is based on a widening spectrum of performance attributes. 

On one hand, the Philippines’ has engineered arguably the most impressive track record in global BPO over the last ten years, despite standing in the shadow of the world’s original BPO kingpin, India.  South Africa, though new to the industry by comparison, continues to turn heads as a uniquely gifted and highly scalable alternative to the standard set of English-speaking options. 

What follows is a comparison of the credentials of both geos. Though not exhaustive, it provides a clear picture of the qualities and challenges that distinguish both countries as hubs of BPO delivery. 

South Africa

Labor costs

BPO wages in South Africa range between US$1000 and US$1200 a month per agent (fully loaded) for English language services contracts. More than half of monthly salaries come from benefits and incentives. 

This puts South Africa’s labor costs at about 20% above those of the Philippines, a fact attributable to a lower supply of talent and a propensity to meet the demands of higher value work.

“South Africa is an advanced economy, which means that you have a higher skill set, but you have to pay for that higher skill set,” explained Peter Ryan, President and Principal Analyst at Ryan Strategic Advisory. “The Philippines has been competing for higher volume, more transactional work. South Africa goes for higher margins.”

An especially influential factor in South Africa is the fact that the federal government provides cash incentives to BPOs (either local or foreign) which operate delivery centers, hire locals and provide service to international clients.  

“The Philippines has been competing for higher volume, more transactional work. South Africa goes for higher margins”—Peter Ryan, President and Principal Analyst at Ryan Strategic Advisory


Business Process Enabling South Africa (BPESA), the country’s national industry association for BPO, claims that there are around 350,000 people employed in South Africa’s global services sector, with 130,000 servicing international clients.  Over 90% of the workforce provides service in English, according to Traci Freeman, Marketing, Research and People Lead at BPESA. South African BPO has “small pockets” of service being provided in other languages, such as Portuguese, Spanish, Italian, Mandarin and Japanese, among others, Freeman added.

NSAM was unable to independently verify BPESA’s numbers. Some of the BPO operators consulted for this article cast doubt on BPESA’s claim , commenting that the actual number of workers might be considerably lower.

South Africa finds itself struggling with an unemployment crisis. The overall unemployment rate (applied to the population between 15 and 64 years of age) closed Q2 2023 at 32.6% (7.9 million people). Youth unemployment for the same period left 4.7 million South Africans between 15 and 34 years of age without a job. 

Though the labor force is wide enough to fill agent jobs, problems arise at the team lead level and beyond. A scarcity of seasoned professionals in the local BPO ecosystem results in higher salary rates for those positions. Vendors tend to solve this issue through training and development, but that has led to poaching between competitors.


While some of the BPO vendors consulted describe connectivity as good enough for on-site operations, some mentioned subpar performance in home setups in smaller towns.

This makes remote work operations difficult to justify beyond the country’s three main urban hubs: Cape Town, Johannesburg and Durban.


Though a relatively stable country on paper, local operators see notable risks in South Africa which can downgrade its standing as a destination for BPO and foreign investment in general.

Power blackouts: There are widespread concerns over South Africa’s power capabilities. In an effort to avoid capacity overload, the government relies on controlled blackouts, known locally as “load shedding”.  

“Where the issue lies is power. They [South African authorities] are in the process of upgrading their power grids in a two-year project. While they are doing that, there are scheduled rolling blackouts from region to region”, commented Steve Weston, Managing Partner at SKWeston. 

“Some of my clients have expressed extreme concern around where the South African government is headed as it relates to closer relationships with Russia,” Steve Weston, of SKWeston

Several vendors confirmed that practically all BPOs in the country have backup generators. While this neutralizes the threat of a blackout, it is an extra (and necessary) cost. A backup generator is rarely an option for home setups. In that case, vendors plan around the load shedding schedule and implement rotating shifts.

Strikes: A series of labor disruptions have been a source of concern for BPO providers. Strikes by taxi drivers and other transportation workers in particular have led to violence in the streets of major South African cities, as well as disrupting mobility.

“Multiple taxi strikes, Uber strikes and other labor disruptions in the last two years have hindered the industry,” commented VOVICX CEO Tariq Alinur. “Violence during these strikes has led to the shutdown of the BPO industry, as employees struggle to commute to work amidst the turmoil. These disruptions have been a significant concern for business continuity.”

Russia: South Africa’s trade and political ties to Russia and China have made foreign investors uncomfortable. The South African government has yet to condemn the Russian invasion of Ukraine. In February of this year, it scheduled naval exercises with Russia and China. 

“Some of my clients have expressed extreme concern around where the South African government is headed as it relates to closer relationships with Russia,” stated Steve Weston. “As such, they are a bit hesitant to outsource to South Africa due to that issue.”

Weston and other vendors mentioned that, even when clients bring up concerns over Russia, they have yet to lose interest in South Africa. 

Potential tax changes: There’s a proposed tax amendment on the horizon which threatens to disrupt BPO operations in the country. 

The amendment could force foreign businesses to carry out “significant business functions” themselves if they want to be eligible for specific tax breaks. This could erode the appeal that South Africa currently has for BPO, assuming that call center operations and other BPO-related activities end up classified as “significant business functions”.


Labor costs

Monthly BPO wages in the Philippines range between US$620 and US$970 per agent for English language services contracts, benefits included. Rates are cheaper compared to South Africa, though the nature of BPO work done in the Philippines trends towards high-volume, transactional tasks, as explained above. 

The Philippines is classified as a “mid-level” destination when it comes to BPO cost structures. Several of the vendors consulted put it below Latin America when it comes to costs, but above India, where the amount of talent available and the high levels of competition have kept costs low.


The volume of BPO workers in the Philippines stood at 1.57 million by the end of 2022, according to data from the Information Technology and Business Process Association of the Philippines (IBPAP), the trade and advocacy group for the country’s BPO industry. IBPAP estimates that the 1.7 million mark will be reached by the end of 2023 and aims to create 2.5 million new jobs in the industry by 2028. Between 2019 and 2022, 200,000 jobs were created. 

NSAM was unable to verify IBPAP’s numbers. Like in BPESA’s case, it must be underscored that IBPAP has a vested interest in portraying the Philippines as a prime location for BPO investment.

The Philippines’ population more than doubles South Africa’s. Though unemployment rates aren’t as high as in South Africa (4.8% as of July 2023), the total number of the unemployed stands at 2.27 million. If one accounts for the underemployed, which reached 7.45 million as of July 2023, the number of people available for employment in the country reaches 9.72 million.

Vendors described Filipino workers as “educated and eager”, underscoring a “very strong BPO culture” which makes finding experienced agents and team leads an easy task.

Nevertheless, the Filipino BPO sector has been feeling the struggle as clients’ demands for service grow more complex. IBPAP President Jack Madrid has spoken of a widening supply gap in Filipino BPO, which comes from a stagnation in skills, as well as a deterioration of English proficiency.


Operators describe connectivity in the Philippines as serviceable enough for on-site business operations with access to fiber broadband connection. Many sources say however that it is “challenging” for WFH models, nevertheless. 

“Work from home can be very bad. I actually think the providers mislead many people with false MPS ratings and poor overall reliability in some areas,” pointed Nathan Muniz, owner of 24/7 Dispatch, a local BPO operator.

“WFH is always more of a challenge […]  but not more than other quality destinations. Good endpoint bandwidth monitoring is a good idea,” commented Andrew McNeile, Chief Customer Officer at Thinscale. “At least you can do WFH and get it to work well, not dealing with power outage issues that can be a factor in other parts of Asia and Africa.”

“WFH is always more of a challenge […]  but not more than other quality destinations. Good endpoint bandwidth monitoring is a good idea”—Andrew McNeile, Chief Customer Officer at Thinscale


In spite of the Philippines’ success as a BPO destination, the country still faces major challenges; some of them old, some of them new to the sector.

Data breaches: The Philippines has had its well-documented troubles with security breaches in call centers. Back in 2015, AT&T had to pay US$25 million to settle a Federal Communications Commission (FCC) after data from about 28,000 of its customers was sold by call center operators which handled AT&T accounts. Several of these operators worked from delivery centers in the Philippines.   

The US Agency for International Development (USAID) warned that the Philippines could lose a portion of its BPO market share in the US due to cybersecurity gaps which remain unaddressed in the country.

Extreme weather: The Philippines is quite prone to extreme weather events. Filipino authorities estimate that around 20 tropical cyclones hit the country and its surrounding area every year, with eight to nine actually crossing the Philippines. At least five cyclones are expected to hit the area between September and November 2023 alone. 

Tropical cyclones are a major disruptor of business continuity. Assuming conditions allow agents to commute to the office, it is common for power outages to happen after a cyclone hits. BPO providers tend to have backup generators for such cases. That, of course, means an extra cost. 

Labor scandals: International media outlets have for years reported on exploitation allegations in the country’s CX/BPO industry. The Washington Post recently published an exposé which paints a grim picture of global BPO operations in the country. Even local government officials have called out for investigations into the matter.

Political authoritarianism: Current Filipino president Ferdinand Marcos Jr. has been described nationally and internationally as an authoritarian leader. Some of the BPO operators consulted mentioned concerns over political authoritarianism, though they underscored a “stable” and “strong” relationship between the current government and industry bodies like IBPAP.

“These areas [in Manila Metro] are very expensive, and most agents cannot afford to live near these facilities. This causes a long commute time and high turnover rate”—Nathan Muniz, owner of 24/Dispatch

Heavy traffic: Heavy traffic has grown out of control in the Manila Metro Area. Manila constantly ranks among the top 20 cities with the worst traffic in the world. It is estimated that, accounting for hours stuck in traffic, locals lose the equivalent of six days and 13 hours a year.  

These areas [in Manila Metro] are very expensive, and most agents cannot afford to live near these facilities. This causes a long commute time and high turnover rate,” explained Nathan Muniz.

NSAM’s Take

Both countries have enough positives and negatives to make this a virtually even match. It all comes down to the needs of each business. South Africa works better for more sophisticated services and skills, while the Philippines sheer demographic numbers provide for a better option for high-volume and low cost operations.

If pressured for choice, though, we give a (very slight) edge to South Africa. 

South Africa lacks the workforce and the enduring history of the Philippines, but it seems to have a better hold at the moment on the trends that are molding the immediate future of BPO: more sophisticated skill sets, multilingual capabilities (of great interest to the European markets) and a growing tech industry. It still has to improve those perks to catch up with top players like India, but the South African economy is strong enough to allow for those improvements. Plus, the country’s unemployment crisis has positioned BPO in the eyes of the federal government as a potential source of youth employment, a situation that could translate into at least sustained support for the industry.

The Philippines has the numbers, but, as pointed out by IBPAP’s president, it seems to be struggling to catch up with the growing complexity of BPO operations. That won’t kill the country as a favored destination, but it might keep it out of the minds of potential clients seeking for a workforce that is better prepared. 

If the Philippines manages to upgrade the skills of at least half of its huge workforce, it will become an even more formidable competitor in global BPO. South Africa won’t be able to catch up to those numbers, but it would still have the option to refine its skill set further to catch the eyes of clients with very specialized needs. 

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Major and emerging BPO geos in the Americas should be mindful of what’s happening in the Philippines and South Africa, as well as other offshore locations. Competition in the sector is trending towards a truly global landscape, allowing clients to experiment beyond what for years have been the most obvious or closest choices.

We’ve reported on the growing interest from European clients in the Caribbean and top Latin American geos. If these locations wish to go head to head with prefered offshore locations in the African and APAC regions, they will have to continue improving their skill set beyond menial tasks and adopt a model that leverages other advantages besides low cost.

Mexico and Colombia have been particularly successful in courting the US market with a diverse, sophisticated portfolio of services. Nevertheless, India and the Philippines remain major competitors for them. If South Africa manages to considerably improve its capabilities, it could eat away some of the region’s share of the market. That would be far from lethal, but it would certainly add unwanted pressures in a marketplace where competition is truly international.

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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