South African nearshoring move is paying off, Logicalis UK boss claims

Bob Swallow insists customers have seen no degradation in service levels following support switchover last month

Logicalis' decision to nearshore its UK IT support functions to South Africa has been met positively by customers, its UK boss has claimed following the completion of phase one of the migration.

As revealed by CRN, Logicalis is shifting a total of 65 first- and second-line support roles to Cape Town as part of a wider global services overhaul. The first phase, which involved 40 roles, was completed in September.

The nearshoring model hasn't been a universal success for resellers, with the fallout from Misco's move to hive out some functions to Budapest five years ago seen by some as a factor in its demise.

Logicalis UK managing director Bob Swallow told CRN that the Cisco, HPE and IBM partner is keeping close tabs on customer feedback, which he claimed had all been positive in the month since the switchover.

"We have had no negative comments from any customers, in fact we've had at least half a dozen quite positive written thanks for the service they are getting," he said.

"The good news from the perspective of our people is that we've managed to redeploy quite a lot who were involved, and almost all the rest of them secured roles before they left. There's a second phase to come in March when we will move the rest of the roles that were in scope, but so far it has been a well-run project."

Savings generated by the move are being pumped into a new UK services practice headed up by former Gartner executive Dean Mitchell.

Swallow said the target is now to grow Logicalis' UK recurring services revenue stream from £30m to £60m over the next three years by expanding Logicalis' managed services repertoire.

"We realise customers have an increasing challenge with the speed that technology is moving in areas such as IoT [Internet of Things] and security," he said. "They need more help, not less, and more managed services. Clearly we want to invest in that, but we also recognise that there are a great deal of skills in the team we have put together in South Africa, so it's a great combination for us."

Romania, Poland and Bulgaria have proved popular nearshore destinations for IT suppliers in recent years, but the fact that Logicalis is part of Johannesburg-listed IT group Datatec made South Africa a natural choice for the integrator, Swallow said, adding that the firm already has a services centre in Malaysia.

"It's a market our shareholders know well," he said. "Secondly, we managed to secure a team that had been doing these services for the UK market for Computacenter. The time zone and language are also clearly in alignment with the UK, and it has affordable labour costs. The opportunity arose and it was a natural fit."

Logicalis UK sank to a £2.1m operating loss on revenues that fell nine per cent to £153.9m in its fiscal 2016, but Swallow said it has now completed its restructure.

"We think we have the right shape now, and clearly we want to get into growth," he said.