The Benefits of Offshoring
Financial Functions to South Africa

In the previous two recent articles, I addressed the concept and considerations for offshoring for CPA firms and companies.  In this article, I will share some information about an offshoring option that can alleviate some of the concerns US companies often have about offshoring—The Republic of South Africa.

South Africa is a popular destination for tourism, with wild game parks, an incredible wine country, British, Dutch, and indigenous history, and an amazing food culture.  But South Africa is also becoming known for offshore outsourcing, and for good reason. The country offers several advantages for businesses looking to outsource their financial functions:

• No language barrier: English is the official language of South Africa, so there is no language barrier to communication between US companies and their offshored financial functions. This can save businesses time and money on translation and interpretation costs.
• Cultural alignment: South Africa has a strong Western cultural heritage, which makes it a good fit for US companies. This can help to facilitate communication and understanding between the two cultures, which can be essential for a successful outsourcing relationship.
• Cost savings: The cost of labor in South Africa is significantly lower than in the United States, which can lead to significant cost savings for US companies. According to a study by the World Bank, the average salary in South Africa is about one-third of the average salary in the United States. This can save businesses a significant amount of money on their financial functions.
• Highly educated professionals: South Africa has a highly educated workforce with a strong background in finance. Many South African universities offer degree programs in accounting, finance, and other related fields. This means that businesses can find highly qualified and experienced professionals to manage their offshore financial functions.
• Time zone: South Africa is only 6 hours ahead of the US east coast, so there’s already an overlap of workdays, which makes it easy to coordinate work between the two countries. This can be important for businesses that need to be able to communicate with their offshore financial functions on a regular basis. In other low-cost countries, the 12 hour time difference requires offshore resources to work the graveyard shift; the best talent in those countries typically don’t have to work such hours, and US companies often wind up with lower performers.

In addition to these advantages, South Africa also offers a number of other factors that make it a good choice for offshore outsourcing, such as a stable political environment, a well-developed infrastructure, and a favorable regulatory environment.

The Benefits of Offshoring Financial Functions to South Africa for CPA Firms

CPA firms can also benefit from offshoring their financial functions such as accounting, audit, and tax to South Africa. In addition to the advantages mentioned above, CPA firms can also benefit from:

• Available talent:  US firms continue to struggle to find qualified professional staff in today’s labor market.  South Africa is rapidly becoming an option to source qualified people at rates comparable or less than other low-cost countries such as India or The Philippines.
• Reduced risk: Outsourcing to South Africa can help CPA firms reduce their risk exposure. By outsourcing their financial functions to a reputable provider, CPA firms can reduce their risk of fraud, errors, and other problems—as long as the processes and procedures from the originating firm are consistent and consistently executed.
• Improved efficiency: Outsourcing can help CPA firms improve their efficiency. By offloading non-core functions to a third-party provider, CPA firms can free up their own resources to focus on more strategic activities.

Conclusion

Offshoring financial functions to South Africa can offer a number of benefits for US companies and CPA firms. By considering the advantages mentioned above, businesses can make an informed decision about whether or not to offshore their financial functions to South Africa.

Here are some additional things to consider when evaluating the benefits of offshoring financial functions to South Africa:

• The specific financial functions that need to be offshored.
• The size and complexity of the business.
• The budget available for outsourcing.
• The level of risk tolerance.
• The desired level of control over the outsourced functions.
• Data security and process protocols

By carefully considering all of these factors, businesses can make the best decision for their specific needs.