DATE:  27 APRIL 2009

SA ahoy

Mia Andric
27 Apr 2009

The global trend in outsourcing may help SA become the outsourcing destination it’s always wanted to be

THE SOUTH AFRICAN IT infrastructure outsourcing market alone is expected to generate revenues of $5.6-billion by 2012, and major deals are increasingly being signed by major players.

Mardia van der Walt-Korsten, CEO of T-Systems South Africa

Mardia van der Walt-Korsten, CEO of T-Systems South Africa, says there are three main reasons for the clear surge in outsourcing activity, with the accompanying cost reductions being a given. “These are increased business complexity, increased IT complexity and a global shortage of IT skills.”

Because ICT has become infinitely more complex over the years, Van der Walt-Korsten says it is not just a case of designing and installing infrastructure for businesses any more. “It has become a science on its own, in terms of optimisation of resources, designing and implementing state-of-the-art and functional solutions and creating business value. An outsourcer, as the specialist, can do this far more effectively and can create economies of scale and manage risks that will benefit all of its clients.”

Increasingly, countries are positioning themselves as the specialists, securing outsource contracts from companies outside their borders, but SA is lagging well behind India and other high-profile outsource destinations.

There are a number of reasons for this. Yaron Assabi, CEO of Digital Solutions Group, says the main stumbling blocks in the way of the growth of the South African outsourcing industry are bandwidth cost and availability, political uncertainty and the volatility of our currency. He says people often overlook the pros South Africa offers as an outsource destination. “For example, the near-shoring countries are generally culturally aligned, and South Africa is a great alternative  we share Europe’s time zone and we speak English well.”

Robert Sussman, joint CEO at Integr8 Group, heartily agrees. He says SA is becoming a favourable destination for three reasons: we have the skills, we speak excellent, clear English, and the Rand’s weakness against the dollar, the pound and the euro makes outsourcing here more cost-effective. “With the cables landing here from this year, bandwidth will no longer be an issue. This will open up South Africa and Africa to provide services to the rest of the world,” he adds.

Themi Themistocleous, chairman of IndigoCube, has been working with government to put SA on the outsourcing destinations map for years. In his opinion, what the country needs to do is to specialise in a particular area in order to become the must-have provider of that to the world.

“Everyone says ‘look at India’. Everyone wants to see how we can and replicate their success here,” he says. “The first thing is that there is a perception we have to overcome – we have to make ourselves technically respected. The Indians overcame the bad perceptions of their country through a concerted marketing and technical effort – they became the best at what they did, they were internationally certified, and they made sure that the whole world became aware of that.”

Themistocleous believes that three things are essential to furthering SA as an outsourcing destination: certification, representation and skills. “But the most important thing is skills. We need more computer science graduates, and we need the universities to produce graduates capable of extremely high standards. Of course, if we don’t have decent standards at school level, and enough matriculants with high maths and science grades, that will become even more difficult to achieve.”