Q&A: The Real Numbers Behind Cape Town’s BPO Boom

From UK tax hikes to AI strategy and infrastructure resiliency, we sit down with Sourcefit’s Andrew Leach to discuss what’s driving South Africa's global outsourcing edge.

Q1. Why Cape Town, and how does it compare when serving US, UK, and European clients?

It depends on which market you mean, really. The UK and Europe are where the cultural fit is strongest—working hours line up almost exactly, and the accent and communication style barely need adapting, unlike other offshore markets where clients end up coaching agents on tone for months. Cape Town's international communities help too; there is real depth in Dutch, German, French, and Portuguese speakers here, which matters for European clients specifically, not just UK ones.

The US is a different conversation, mostly down to time zones rather than culture. There is less overlap for real-time contact center work, so it tends to suit back-office and processing roles better. But the exchange rate does a lot of the heavy lifting for US clients: with the rand trading around R16 to the dollar, South African delivery is simply cheap in dollar terms, on top of whatever cultural fit exists. That is less true for UK and European clients, where the National Insurance (NI) cost story matters more than currency.

There is also a cost driver on the UK side right now. Employer NI went from 13.8% to 15% in April 2025, with the threshold dropping too, so the cost of employing someone in the UK just keeps climbing and shows no sign of reversing. More businesses are looking at outsourcing because of that, not despite it.

South Africa's Global Business Services (GBS) sector has grown roughly sevenfold since 2015, and the UK alone makes up over 60% of the country's international GBS market. We marked three years here with the launch of our new Cape Town office—the City of Cape Town and CapeBPO both turned up in person to support it, which says something about how seriously this sector is taken here, not just by operators but by the city itself.

Clients typically see 40–60% lower labor costs moving work to a hub like this. That is the number that gets the conversation started, but it is rarely what keeps clients here long-term; that is usually the working relationship and the results.

It is a different story from our Philippines or Dominican Republic sites, which serve different time zones and client needs entirely. Cape Town is built specifically around the UK, US, and EU relationship, and we have been doing this for over 15 years now. It is not a first attempt at getting nearshore delivery right—it is the model we have already proven elsewhere.

Q2. AI and local talent – complement or displace?

Complement. It’s not just a talking point—it is genuinely how we run operations. AI takes on the transactional stuff: routine queries, simple lookups, and the bits that never really tested anyone's skill in the first place.

That frees our people up to focus on complex work: full conversations, problem-solving, and situations where a client needs someone to actually think, not just follow a script. We are not cutting headcount because of AI. We are changing what the headcount does, and in a lot of cases that means more interesting, higher-skilled work for our teams, not less.

We are backing that shift with real investment in our people, not just the technology. Our Cape Town team recently kicked off a leadership development cohort, working through structured coursework on building better managers—because if agents are being handed more judgment-based work, the people leading them need to be equipped for that too.

Q3. Infrastructure and utility reliability – hurdle or non-issue?

It is a real factor, no question. Electricity being the obvious one; nobody in this sector pretends load shedding hasn't shaped how operations are built. But it isn't stopping 24/7 client operations, ours included. The sector has had years now to build proper redundancy into how it runs, and that investment shows.

The government and city support has been real too, not just talk. When we launched the new office, it wasn't a private affair—the City's economic growth team and CapeBPO were both there in person, speaking to what the sector means for local job creation.

Our own office sits in the CBD specifically because it doesn't suffer power disruptions—a deliberate site decision, not luck. Add 24-hour manned security, full CCTV coverage, and a backup office a couple of streets away, and it is built resilient by design, not by accident.

Q4. Talent access and labor policy – friction or offset?

Talent wins this one easily. South Africa has around 16.5 million English speakers—a genuinely deep pool to draw from—plus real strength in financial services and insurance-trained talent specifically, where domain knowledge matters as much as language skill.

Cape Town has extra language capability on top of that—Dutch, German, French, Portuguese, and more—reflecting the international communities here. That gives clients options beyond English-only service, which matters more as they look to consolidate more geographies into fewer delivery hubs.

We invest directly in that pipeline too, rather than just drawing on it. Our empowerED programme runs interview-skills and career-readiness sessions with senior high school students—the kind of groundwork that keeps the talent pool replenishing itself rather than everyone competing over the same pool. And we back it with proper governance: ISO 27001 and 27701, SOC 2, GDPR, and HIPAA compliance, among others. Regulated clients want to see the controls, not just the capability.

Q5. Where is the growth over the next 3–5 years?

Cape Town is set to take real market share. Nearshore demand for UK and European clients keeps growing, especially as UK cost-to-serve keeps climbing on the back of things like the NI changes—that pressure isn't going away.

The sector has already proven it can grow at pace here—roughly sevenfold growth since 2015 speaks for itself—and household names like Amazon, Google, IBM, and Microsoft have all put work here. That kind of company doesn't show up on a whim; it shows up because the fundamentals stack up.

You can feel that momentum on the ground too. Our team has been out riding for Afrika Tikkun on the Cape Cycle Tour, supporting youth economic empowerment—less about PR, more about the sector genuinely believing it has a stake in the city's future, not just its own growth.

What would help most from here: continued infrastructure investment, and keeping the talent pipeline strong as demand scales. The opportunity is there. The job now is making sure supply keeps pace with it.

About Sourcefit

Sourcefit's Cape Town office marks three years of investment in South Africa's BPO sector, part of a wider global footprint spanning the Philippines, Dominican Republic, Northern Ireland, Armenia, and Madagascar. The new office reflects continued confidence in Cape Town as a nearshore hub for UK and European clients—backed by strong local talent, cultural alignment, and the ongoing support of CapeBPO and the City of Cape Town. Sourcefit is also expanding its UK office, marking a major growth chapter on both sides of that relationship.