South Africa  – A Better Nearshore Option

14 April 2023

By Megan Owen

Head of Recruitment, SASDH

I have been lucky enough to have developed my recruitment skills in both Europe and South Africa, and in January of this year, I joined the newly launched South Africa Software Development Hub, based in Bryanston, Johannesburg which offers nearshore IT Software Development and Cloud skills to UK and European Countries

In such difficult times for all organisations for them to stay at the top of their game, they must employ technology not just to meet customer needs, but to deliver them cost-effectively.  The result is that the demand for technology is increasing at an exponential rate and the software industry is becoming increasingly saturated.

As a result, the demand for software engineers and DevOps/Cloud specialists, even after major layoffs by some of the major IT companies such as Meta, Twitter, Alphabet, Microsoft, and Amazon, is forcing salaries and contractors’ rates to continue to rise at an alarming rate, in some cases by over 38% over the last 2 years.

Increasingly companies have been forced to slow down developments at a time when it is vital to deliver changes that their customers are demanding in these turbulent times and to build a systems architecture that can deliver rapid changes.

Changes in the Global Market

In this scenario, businesses are having to look elsewhere to source the talent they need, and with many businesses continuing to have staff working from home after the covid pandemic, looking for alternative and more economic solutions has led to building global development teams.

Over the last ten years, organisations in the UK and Europe have built teams in Eastern European countries such as Poland, Romania, Bulgaria, and Ukraine, and some have built teams in Portugal.  But even in these countries, the demand has led to significant increases in rates, much in line with the increases in Western Europe and the UK.

The benefit of setting up teams in these countries was a significant pool of available talent, affordable rates, similar time zones, and a close proximity to cultural understandings, certainly more so than say India.

Alas, the size of the talent pool has dwindled, with those available maybe not so talented, and many of the talented staff looking for job security in permanent jobs, rates that have escalated, and a realisation that the cultural affinity is not quite as close as was first thought.

A Nearshore Alternative – South Africa

I have always known that the South Africa Technology sector is well advanced, indeed if you take the Financial Services, both banking and insurance, Defence, Medical and Mining sectors, their use of the latest technology, especially cloud computing, developing microservices, adoption of AI and machine learning is ahead of many western countries including the UK and USA.

At one stage it was said that banking systems were 10 years ahead of the USA and 5 years ahead of the UK.  Certainly, the mining sector has adopted AI and Machine Learning to develop the SMART Mine, where vehicles are controlled from above ground, identification of best ways to exploit mineral seams, and developing practices which mean that risk to human life and industry is nearly eliminated.

So what differentiates South African Talent from those of Eastern Europe or Portugal?

Salaries and Contractor Rates

In the current market, we have identified that salary and contractor rates are up to 50% less than those of the UK and Western European countries, and between 25 and 30% less than those of Eastern European Countries and Portugal.  But whilst the cost factor is great, other factors give significant productivity gains.

Skills and Innovation

Well, I have already alluded to that the fact that South Africa has been an early adopter of new technologies, and this goes back to the apartheid days when the country was unable to purchase solutions due to sanctions being applied.  They had to make a plan!!  They became true innovators.  This creativity continues today and it is noticeable in the high degree of collaboration that goes on in teams.

Cultural Affinity

  • English is the standard language in South African business even though there are 11 official languages, English prevails for the majority.
  • Constant migration back and fore from countries such as the UK, Netherlands and Germany, means that South Africa has a very internationalist feel.  Many of the major business and government organisations were established by European settlers, and to this day are closely aligned culturally.  This is far more so than India or many of the former Soviet states.

Time Zones Closely Aligned

With South Africa only one hour ahead of the UK and the same time as Central European Time, it means that it is easy to assimilate teams whose members or Product Teams might be in based in different countries.

Work Ethic

The country’s history of apartheid and struggle for equality has created a culture of hard work and determination, where individuals are driven to succeed in both their personal and professional lives. You will often find that tech individuals are driven to learn and continually add to their skills in their own time by attending local Universities that offer part-time courses or UNISA, Africa’s distance learning university much like the Open University in the UK.  

South Africa is known for its economic growth potential and opportunities, which encourages individuals and businesses to work hard and excel in their respective fields. There is a strong culture of work ethic and ambition that pervades the country.

So why not go to our website and fill out the contact form? We will ensure we arrange a meeting to discuss how you can avoid slowing down your move digital transformation and leave your competition stagnating while you make a play for their customers!