Hiring in South Africa


Hiring in South Africa can be an affordable and convenient way to broaden your talent pool and streamline operational costs.

Western businesses are hiring in South Africa for many reasons. The government is welcoming, the market is lucrative, and the workforce is big on potential. If you want to access top talent while streamlining your labour costs, South Africa could be the opportunity you’ve been waiting for.

About South Africa

South Africa’s labour market is vast, diverse and multi-talented. It has a working-age population of more than 40 million. With rising levels of tertiary education compared to surrounding countries, and particularly strong sectors in finance, engineering, IT and customer service, it offers plenty of opportunities across many different industries.

Language skills are a major strong point. English is the primary language and is spoken fluently by most people in the country with a clear and easy-to-understand accent. However, it is also home to 11 other official languages, with many other African and European languages being widely spoken.

As such, it’s a great outsourcing location for businesses in the West and elsewhere in Africa for services such as customer service, IT support and translation.

However, the economy is still developing and has relatively high unemployment rates, especially among workers between the ages of 15 and 34, where unemployment often reaches as high as 40%.

The country, therefore, has a problem. Its workforce is high in potential but relatively limited in opportunities. Keeping these young, upwardly mobile professionals in the economy is key to the country’s growth prospects.

All of this represents a tough challenge for the government but a tempting opportunity for foreign companies looking to build their talent pools. Faster communications make it easier than ever to source and work with freelancers and contractors across multiple industries. South Africa has plenty of skilled individuals, especially across areas such as finance, law, marketing or software development. Employees in these sectors are often in high demand and can command high wages, making them inaccessible to smaller and medium-sized businesses.

Hiring workers in South Africa is a great way to find people with these hard-to-get skills at a price point you can afford. It levels the playing field between small and larger businesses, giving you access to people with the skills you need to compete.

South Africa’s government has also identified foreign employment as a way to keep all that potential working within the South African economy. It is promoting itself as a rising hub for business process outsourcing, blending a desire for more cost-effective employment opportunities with a promise of higher levels of quality and reliability.

Its strategy has worked, and foreign investment has flooded into the country in recent years, with international companies choosing to hire South African freelancers, outsource operations to South Africa and even expand their domestic operations into the lucrative South African market.

Why hire in South Africa

These companies have targeted South Africa for several reasons:

  • Language skills: A multi-lingual country in which English is the primary language is a major bonus for outsourcing operations. India and the Philippines have well-established reputations in the outsourcing sector, but while English skills are high, it is not the first language, which means miscommunications can be common, leading to frustration and a lower customer satisfaction rating. As businesses recognise the growing importance of customer service, they are looking for more from operators that some traditional BPO providers can give.
  • Talent: South Africa’s workforce has a reputation for offering high-value recruitment opportunities, especially in sectors such as the law, finance or IT. Businesses are turning to South Africa to recruit people right the way up the talent chain.
  • Labour costs: Although wages are slightly higher than in the cheapest outsourcing locations such as the Philippines, they are still a substantial discount on levels back in the UK or Europe. Businesses can recruit professionals at a top discount compared to their counterparts in their domestic countries.
  • Expansion opportunities: South Africa’s market is a tempting target for many Western businesses. It’s the second-largest market in Africa behind Nigeria, but the key is its familiarity. Africa is a great business opportunity, but its domestic markets are very different to the West with differences in consumer profiles. South Africa has more similarities to the West, with similar cultural norms creating demand for similar types of services. South Africa is a great gateway market. Make it here and you’ll not only reap the rewards of a rich and lucrative market, but also be much better placed to expand across the rest of Africa.

South Africa, therefore, offers all sorts of opportunities, whatever type of skills you’re looking for. When hiring staff in South Africa, though, it pays to understand the landscape and the most cost-effective options.

Employment law in South Africa

One of the biggest differences when hiring staff in South Africa is employment law. Although similar to the West, it tends to have better protections for workers and has measures to ensure equity in the workplace that go somewhat beyond what many companies might be expected in the UK, for example.

When working with freelancers and contractors, it’s also important to make sure you classify all workers. More regular contractor engagement may need to progress to full-time employment at some stage to avoid incurring the wrath of the regulators.

When hiring staff, therefore, it’s important to understand what the law requires and what employees might be expecting. For that, you may benefit by getting support from an organisation such as an employer of record, which can ensure you meet all regulatory requirements and ensure workers get the benefits they are entitled to.

An EOR serves as the legal employer of your staff in South Africa, which means it will also have full responsibility for ensuring that all taxes are paid and documents filed correctly with the authorities. This protects you and helps you avoid any of the common errors that can arise when working in a foreign and unfamiliar regulatory landscape.

Other options include:

Professional Employers Organisation: A PEO works in much the same way as an EOR. However, employment status is shared between you and the PEO, which means you’ll need a legal entity. This can be a great option if you already have a presence in South Africa, but want to offload some of the administrative challenges of hiring staff. A PEO can effectively serve as your HR department, taking on all the low-value administrative work and leaving you to focus on the working relationship.

Agent of Record: If you start hiring multiple contractors and freelancers, an AOR can help you manage your growing workforce. It manages details such as classification, onboarding, sourcing and managing payments. It takes the load off you and helps with compliance challenges.

Direct employment: Some companies will choose to employ staff in South Africa directly. While this gives you full control over the working relationship, it can be expensive, especially at first, due to the need to set up a legal subsidiary. For companies just starting in South Africa, this can be an expensive option. An EOR can be a low-risk approach to hiring staff in South Africa without any of the financial or legal risks.

What the future holds

Moving into the future, the prospects for hiring staff in South Africa are likely to grow. Technology is growing, the workforce is expanding, and the range of support on offer is also evolving. As businesses seek ways to optimise costs without sacrificing quality, South Africa offers employment opportunities across the board.

If you’re looking for more information about hiring staff in South Africa, feel free to download our free PDF guide today.

Related Posts