Employment Cost
The average salary in South Africa depends on the type of workers you want to hire and the location you want to work in.
South Africa’s economy has made significant progress over the past few years. Growth has become more reliable, education levels are rising, and the workforce is becoming younger, more diverse, and multi-talented. However, unemployment remains relatively high, with many young people struggling to access high-paying, high-quality jobs. As such, the average salaries remain substantially lower than in most Western economies across the board, which makes it fertile ground for business process outsourcing.
What are the average salaries in South Africa?
Finding a definitive figure on the average salaries in South Africa can be difficult. Wages vary from one city to another and across different professions.
According to Statistics South Africa (Stats SA), in 2024 the average monthly earnings reached R28,220 in Q3 2024, which represents a 6.6% rise on the previous year. This compares to around £2,334 in the UK. In general, wages tend to be between 50% and 70% of the levels of counterparts in the UK or other Western economies. This means the cost of labour is higher than in some of the lowest-cost outsourcing hubs around the world, but they are still much lower than in the UK.
Cheapest cities in South Africa
It’s easy to underestimate the economic diversity across South Africa. The country is vast, with major differences in economic activity from one city and region to another.
As a rule of thumb, Johannesburg or Cape Town have some of the highest wages in the country, but that comes with some of the most highly developed infrastructure and deeper talent pools, especially in sectors such as finance.
Some of the cheaper cities include East London, Bloemfontein, and Kimberley. Each of these cities, though, is growing and boasts top-class infrastructure, making them attractive propositions for businesses, as long as you can source people with the skills you’re looking for.
Government incentives and other forms of support may also be available for companies that bring high-paying jobs into the area. If you can find people with the skills you need in some of these areas, it can have a positive impact on the overall ROI of your outsourcing strategies.
Salaries per job function
South Africa’s average wages are slightly higher than in the lowest-cost outsourcing hubs of India and the Philippines. As such, for simple, unskilled roles, many companies still choose the savings on offer from the traditional outsourcing model. However, salaries become highly competitive in South Africa when you get into high-value job roles. Average wages for technology professionals in South Africa could be around 35,000 per month, which equates to around £1,600. For highly skilled technology professionals in the UK, average wages might amount to around £54,000 per year or around £4,000 per month.
Wages, therefore, are more than double in many cases, the levels in South Africa, with the gap widening as you move on to more senior positions. The great strength of South Africa’s business proposition, though, is that lower wages don’t necessarily mean a reduction in quality. South Africa is rich in talent, even if it struggles to generate the high-paying jobs to satisfy that talent. Bringing those jobs in from overseas is a great way to keep that talent within the South African economy.
It’s a win/win proposition for all sides involved. Western businesses need to source high-quality talent at a more affordable price. A shortage in talent, high wages, and competition from larger companies make it difficult for SMEs to source people with the skills they need to compete. However, in a world increasingly dependent on digital transformation, doing without those skills is not an option.
Outsourcing, therefore, is a great way to level the playing field for SMEs and bring new opportunities to businesses and individuals within South Africa. By attracting foreign investment into the country, the outsourcing industry is becoming increasingly important to South Africa’s growing economy. It’s predicted to grow at 10% year on year up to 2030, and as of 2023 was thought to employ 270,000 people across six cities. In 2023 alone, the BPO industry was thought to have created 19,307 jobs and contributed USD 309 million to export revenue. As the sector develops and evolves, those numbers are likely to expand, which is why the government has been so keen to promote the industry.
The sector has been encouraged with tax credits and grants, as well as world-class infrastructure. South Africa has invested heavily in its digital communications, with super-fast internet being the norm across the main cities. This enables fast and seamless communication between employees in South Africa and the hiring companies back in the West. Remote work is becoming the norm with companies regularly working with multi-disciplinary teams across many different countries.
The cost of hiring in South Africa
The overall cost of hiring in South Africa will also depend on the way in which you hire them. Working with a BPO company is probably the simplest when outsourcing basic functions. You’ll pay a fee to the BPO company, which will then assign employees to your company. This is commonly done in areas such as customer service, with BPO companies taking on call centre responsibilities for companies in the West. However, this option limits the control you have over your employees and the level of interactivity you can expect.
An Employer of Record (EOR) offers enhanced levels of control without the cost of setting up a legal entity in the country. The costs will generally involve the average salaries of the employees in South Africa, together with a service fee, which might be an additional 10 to 20% of the employees’ salary, depending on the level of support on offer.
Comparing that with hiring directly, therefore, this still represents a significant reduction in domestic wages if we assume wage levels of around 50% of the UK. However, that 10% service fee also avoids the need to hire HR professionals and set infrastructure to manage the administrative side of the employment process.
Average salaries in South Africa, therefore, remain far below the UK and other countries in the West. Although economic growth has brought some increase in wages, they still lag behind growth in the UK, which means South Africa will continue to offer a cost-effective approach to talent acquisition, especially for the more high-value job functions.
To find out more about hiring in South Africa, feel free to download our handy PDF guide.