Establishing a South African Entity for a London-Based Business

Introduction

In response to the challenges posed by the COVID-19 pandemic, five London-based recruitment agencies formed a consortium to replace their office functions in Cape Town, South Africa. This case study explores the benefits realised from this offshoring initiative.

Formation of the South African Entity

With the backdrop of COVID, the consortium established a separate South African entity to manage operations. The company was set up with comprehensive infrastructure, including:

• Accountants

• Bank Accounts

• HR

• Office Space

• Payroll

• SARS (South African Revenue Service)

• Recruitment

  
  

Training and Development

From a standing start, the project transitioned to Business as Usual within six months. During this period, 75 employees were trained, coached, and mentored in various functions such as:

• Timesheet Processing

• Onboarding Compliance

• Headhunting

• Temporary Booking

  
  

Financial Savings

The financial benefits of offshoring to South Africa were significant:

• Based on an average central London salary of £25,000 (£1.875 million per annum), the consortium saved:

  • Over £1 million in year one

  • Over £5.5 million in the following four years

    
    

Growth and Flexibility

After the handover, staff numbers increased to over 100, demonstrating the ability to flex up and down based on UK market demands. This adaptability ensured a responsive and efficient workforce.

Conclusion

The consortium's decision to offshore its office functions to South Africa resulted in substantial financial savings, efficient training and development of staff, and enhanced workforce flexibility. This case study highlights the benefits of offshoring as a strategic response to global challenges.