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1
SAITIS BASELINE STUDIES
Presentation to SAITIS
Innovation Working Group
31 Jan - 3 Feb 2000
Tina James - International Development
Research Centre
Philip Esselaar - Miller Esselaar and
Associates
2
BACKGROUND
Various initiatives in South Africa
• Foresight (DACST)
• E-commerce policy (DoC)
• National Qualifications Framework (Depts of Education and
Labour)
• ISETT SETA (Dept of Labour)
• SITA (State IT Agency - DPSA)
• Donor-related activities in the Information Society
and then……
• SAITIS (DTI)
3
BASELINE STUDIES REPORT FORMAT
Part I: Overview
Defining the Industry
Global and Regional Trends
Study Methodology
Part II: The IT Industry in South Part III: IT Jobs and Skills
Africa in South Africa
National Trends International and National Trends
Regulatory/Policy Environment in the IT Labour Market
Players in the IT industry Supply / demand trends
Status of the IT industry Remuneration
IT skills (current and future)
Part IV: Findings
Issues and Challenges facing the IT
industry
Recommendations and Actions
Part V: References
and
Appendices
4
METHODOLOGY
About 40 Interviews
Four discussion groups
Available secondary sources
Jobs and skills scan (456 / 2 500 companies)
Collaboration with CITI and ITA
Feedback from SAITIS Working Groups
5
THE IT INDUSTRY IN SOUTH AFRICA
Subject to Global Pressures
Growing very quickly, as evidenced by Market Capitalisation
increase from R68-billion to R137-billion in 4 months
However, 4 companies account for 70% of Market
Capitalisation
Rapid growth of new entrants encouraging
6
IT Industry Spend (R 000s)
1992 1993 1994 1995 1996 1997
IT Hardware 7 450 8 020 9 459 9 259 9 903 10 425
IT Software 1 742 2 003 2 343 2 769 3 843 4 062
IT Services 5 319 5 695 6 679 6 053 7 298 8 937
Office Equipment 795 838 1 032 959 898 941
Internal 7 358 7 863 8 063 8 779 9 016 9 265
Telecomms 16 186 17 286 18 354 24 699 25 409 25 191
TOTAL IT Spend 38 858 41 705 45 925 52 512 56 361 58 833
7
Growth in Overall SA IT Vendor
Revenues 1985 - 2002 (F)
45 000
40 000
35 000
30 000
25 000
20 000 IT Revenues
15 000
10 000
5 000
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2
8
IT Sales by Sector
9
Growth in Major Segments of the IT
Market
1997 1998 1999 2000 2001F
Computer Hardware 9 500 10 700 12100 13 500 15 200
Software Products 3 300 3 900 4 700 5 600 6 700
IT Services 6 000 7 200 8 700 10 400 12 600
Overall IT Market Growth 18 700 21 800 25 400 29 500 34 500
Source : BMI-TechKnowledge, Overview of the South African IT Market, 1999
10
% Growth in Major Segments
1997 1998 1999 2000 2001F
Computer Hardware 19% 13% 13% 12% 13%
Software Products 19% 18% 21% 19% 20%
IT Services 22% 20% 21% 20% 21%
Overall IT Market Growth 20% 17% 17% 16% 17%
Source : BMI-TechKnowledge,1999
11
Market Capitalisation ( R m)
10/09/99 11/01/00
Electronics & Electrical 9 722 10 941
Information Technology 56 280 88 015
Telecommunications 2 729 38 318
TOTAL 68 731 137 274
12
Major Players in
Telecommunications Services
Sector No. of Dominant Operators
Operators
Fixed Wire Telephony 1 Telkom
Cellular 2 MTN, Vodacom
Paging Radiospoor,Autopage
23
Vans EDS Africa, Firstnet, Trafex
25 Fleet Call, Q-Trunk
Radio Trunking 3 Orbicom, Sentech, Telkom, Transtel
Satellite 4 Eskom, Transtel
Public Enterprises 2 Internet Solution, UUNET Internet
Internet 60+ Africa, M-Web, Intekom,SAIX,
Wireless Data 2 Swiftnet, WBS
13
Worldwide Internet Growth
350.0 328.5
319.7
300.0
237.3
250.0
180.1
200.0
227.7
142.8
150.0 111.5
170
81.9 131.5
100.0
97.2
50.0 68.7
0.0
1997 1998 1999 2000 2001 2002
Internet (1997-2002 C AG R = 29.8% ) W orld W ide W eb (1997-2002 C AG R = 34.9% )
14
Number of South African Households
with Internet Access
1996 1997 1998 1999 2000 2001 2002 2003
% Households
with Internet 0.5% 1.8% 4.1% 6.0% 7.4% 8.2% 9.2% 10.5%
access in the
home
South Africa
1 million users by end of 1998
3,5 million predicted by 2003
15
IT USERS IN SOUTH AFRICA
16
IT USERS IN SOUTH AFRICA
Most large organisations are significant users
Accurate information not available because:
Decentralisation
Rapid Change
Expense of collecting statistics
Dispersal of ICT budgets
17
IT Users in South Africa
Initially driven by IBM and the other major players
Brought Expertise, Training & Best Practices to the industry
South Africa developed some world-class solutions
United IBM 3600 in the late 1970s
Multinet/Saswitch in the early 1980s
Parastatals (Eskom, SAA, Spoornet)
18
IT Users in South Africa (continued)
• Measurement and understanding of the industry was easy
- Mainframe driven
- Dumb terminals
- Central control
- Small IT professional class
• Now, we have EVERYBODY using IT
- out of diverse budgets
- at home
- through cellphones
19
Hardware, Software & Professional
Services Sales
Sector Hardware Software Professional
(Rm) (Rm) Services(Rm)
Agriculture, Forestry,Fishing 50 30 25
Mining 300 100 150
Construction 50 30 25
Manufacturing 2 500 950 1 200
Transportation, Communications
& Electricity 1 500 500 800
20
Hardware, Software & Professional
Services Sales (contd)
Sector Hardware Software Professional
(Rm) (Rm) Services (Rm)
Wholesale 500 75 100
Retail 2 000 500 600
Finance, Insurance, Real Estate 2 500 750 1200
Services 600 190 200
Public Administration 1 500 430 700
TOTAL 11 500 3 555 5 000
21
Large South African IT Users
(> R 20 million per year)
Company IT Server Workstation No Of Users
Architecture Architecture
Spoornet NT Windows 95 Not available
ABSA Unix/OS2/NT/MVS NT 36 000
Eskom IBM/Novell NT/Windows 95 15 000
Iscor MVS/Unix Windows 95 10 000
Transnet IBM/NT IBM/NT 10 000
Standard Bank IBM/NT/Novell Windows 95 8 600
Reliant NT/Linux Windows 6 500
De Beers Unix/NT/IBM NT/Office 97 5 400
Firstrand IBM/NT/Novell Windows 95 3 550
McCarthy Info Systems Unix/NT Windows 95 3 500
SA Post Office Unix, others Windows 95 3 000
Sun International Novell Windows 95 2 500
Durban Metro Council NT/MVSC 300 NT/Windows 95 2 000
Unilever NT/HP/Digital NT 2 000
Source: IT Users Handbook, 1999
22
Large South African IT Users
(continued)
Anglo American Unix/NT/Digital NT/Windows 95 1 500
Guardian National OS 390 Windows 95 1 500
Truworths Unix/Risc 6000 NT/Windows 95 1 500
Volkswagen NT/Novell Windows 95 1 500
SA Eagle Insurance Novell/NT Windows 95 1 300
Commercial Union NT/OS2 OS2/Windows 1 200
Mercedes Benz NT/Novell Windows 95 1 200
Databuild Unix/NT NT 1 000
Premier Milling NT/HP NT 1 000
Bank of Lisbon NT/Novell Windows 95 800
Delta Motor Corp Unix/HP NT 650
Momentum Life IBM OS2 500
Robertsons NT/OS 400/Novell Windows 95 500
Clicks Unix/IBM Windows 98 400
Swiss SA Re NT NT 300
Cape Metro Rail NT/Novell Windows 95 250
Cable Technologies NT Windows 95 150
Metro Cash and Carry IBM/Unix/Novell Windows 95 80
Source: IT Users Handbook, 1999
23
Total IT Industry Revenues
SICC Code Description 1998(RM)
Manufacturing
3000 Office,accounting & computer machinery -
3130 Insulated wire & cable 1 100
3210 Electronic valves, tubes & other elec components 300
3220 Television & radio transmitters & apparatus for line
& telephony telegraphy 1 500
3230 Television & radio receivers, sound or video
recording or reproducing apparatus, & assoc goods 1 500
3312 Instruments & appliances for measuring, checking,
testing, navigating & other purposes, except -
industrial process control equipment
3313 Industrial process control equipment 100
24
Total IT Industry Revenues (contd)
SICC Code Description 1998(Rm)
Services - Goods Related
5150 Wholesale of machinery, equipment & supplies 10 000
7123 Renting of office machinery & equipment (incl computers) 5 000
Services - Intangible
6420 Telecommunications 35 000
7200 Computer & related activities 7 000
TOTAL 61 500
25
R & D IN SOUTH AFRICA
26
R & D IN SOUTH AFRICA
R& D expenditure:
• South Africa 0,8% of GDP (R 5,72 billion) in 1997
• OECD 2,5 - 3,0% (Japan, Germany, USA)
• Taiwan 1,1%
National Research Foundation:
Competitive industries (1999) R 20 million total , R 6 m on IT
Open Research (1999) R 0
THRIP (1999) Telecomms R 6,6 m
• Average of R 250k
• No figures available for IT
(embedded in Manufacturing data)
IT Grants (1999) R 2,3 m
• individuals, 20 grants
27
R & D IN SOUTH AFRICA
Innovation Fund
1998/99 R30m total Crime prevention R 12m
Info society R 11m
Value addition R 15,5m
1999/00 R 45m total About R 10m in IT projects
for next three years
28
FORESIGHT
29
FORESIGHT
Commenced in 1998 to November 1999; report has just been
printed
ICT Working Group of 20 - 30 members; 12 sectors and crosscuts
8 2-day workshops
Delphi Survey - 1 500 questionnaires sent out
• 220 responses in first round
• 80 responses in second round
Recommendations to shape shorter-term industrial policy and
longer-term technology related research and development policy
30
FORESIGHT
Technology Outcomes:
• IT Technology Map:
– Knowledge Management
– FutureWeb
– Intelligent Systems
– Bio-IT
– Content Development
– E-tagging
– Advanced Software Development Platforms
– Smart Materials
– IT-supported New Learning Methods
31
FORESIGHT
IDENTIFIED OPPORTUNITIES
AGRICULTURE BIODIVERSITY ENVIRONMENT ENERGY
Affordable global monitoring systems for precision farming
Intelligent robots for harvesting/sorting
Satellite-based monitoring
Portable electronic guide to fauna/flora
Computer modelling to predict food security
Modelling for water recycling technologies
Pollution monitoring from space
32
FORESIGHT
IDENTIFIED OPPORTUNITIES
SAFETY AND SECURITY
Intelligent intruder devices
Home surveillance systems
Electronic vehicle ID technology
Integrated criminal justice system
Electronic protection of cash in transit
Visual, sound and sensory surveillance
Electronic tagging
Embedded nanochips
33
FORESIGHT
IDENTIFIED OPPORTUNITIES
FINANCIAL SERVICES
Banking for the unbanked
Satellite-based financial services to the African Continent
Information kiosks in Postbanks
Mobile Financial transactions
SMART card for payments in SADC
Virtual banks
Holistic risk management systems
34
FORESIGHT
IDENTIFIED OPPORTUNITIES
EDUCATION
Virtual Reality for learning applications
Non-formal interactive telelearning in homes / community centres
Electronic media-based course for tour guide training
Virtual Reality training for skills development in mining
ICT-supported training and accreditation for natural resource
management
35
FORESIGHT
IDENTIFIED OPPORTUNITIES
YOUTH
Multimedia networks to sell indigenous products
Simulations for understanding economic issues
Games (virtual sport, SA culture)
Portable Multimedia devices
36
HUMAN RESOURCE DEVELOPMENT
37
Why a Jobs and Skills Mailscan?
Data required on:
• Jobs available and planned for
– IT industry (hardware, software, etc)
– IT users (NGOs, associations, govt)
• Current trends in supply/demand
• Income levels
• Emigration / immigration statistics
• Brain drain
• Jobs profile
– part-time / contract / full-time
– turnover rate
– average length of service
38
Why a Jobs and Skills Mailscan?
Data required on:
• Current skills levels
• Future skills requirements
• Training time
• IT training spend
• Labour Intensivity
• Unionisation
Little available at the detail required for SAITIS
Baseline Studies
39
Jobs and Skills Scan
Based on ITNQF domains
Information Systems and Technology Management
Systems Development
End-user computing
Data communications and networking
Computer operations
Hardware and computer architecture
IT education, training and development
IT sales and marketing, Other
40
Jobs and Skills Scan
Broken down into:
Employees by race / gender
Temporary / permanent employees
Vacancies
Terminations
Employment in 5 years time - forecasts
Various institution-related information
IT Training spend
Outsourcing
Social responsibility
R&D, etc.
41
JOBS AND SKILLS SCAN - FINDINGS
Significant under-investment in IT Skills Training
• 40% no investment in training
• 23% of IT vendors spent in excess of R 100 000
• Public sector spent most per company
• IT vendors spent most per individual
Sectoral distribution of IT staff
• 28% of total staff covered are IT employees
• IT vendors have highest concentration followed by finance/ insurance,
and professional/scientific/technical services
• Real estate, publice administration and construction have highest
proportion of contract to permanent IT staff
42
JOBS AND SKILLS SCAN - FINDINGS
Categorisation of IT staff by skills domains
• 25% of IT staff in systems development
• 14% in IS management
• 14% in computer operations
• 14% in end-user computing
Race and gender distribution
• 70% White
• 13% African
• 8% Asian and Coloured
• 27% Female
Use of contract staff
• Systems development has highest proportion
• Hardware and computer architecture
• Education and Training
43
JOBS AND SKILLS SCAN - FINDINGS
Projected employment estimates for IT staff
• 56% overall increase by 2003
• Greatest increases expected in:
– systems development 90%
– IT education / training 76%
– IS management 79%
• Little increase expected in computer operations (0,75%)
IT Outsourcing
– Over 63% outsource some activities
– >30% outsource more than half
– highest in utilities, construction, wholesale and retail trade,
food and accommodation services
44
JOBS AND SKILLS SCAN - FINDINGS
IT Social Investment
• very little - >80% had no social investment
• 7% of total spent > R 50 000
• 15% of IT vendors spent over R 50 000
IT vendor profile
• > 50 % of IT vendors were in services and consulting.
– 44% in software development
– 26% in training
• >50% IT vendors generate revenue ourside of SA
• 33% generate revenue from other African countries
45
MIGRATION and BRAIN DRAIN
Statistics:
Official SA statistics: 82 811
Hodge et al study: 233 609
• Factor of 3,2 higher than official figures
• 77% have tertiary education
• 1 932 persons in S&T left SA (1989 - 1997)
1998 CPL survey:
Of voluntary job changes:
• 29% of programmers left country
• 23% analysts / programmers
• 31% at management level
SA Migration Project / SANSA
46
MIGRATION and BRAIN DRAIN
New Zealand
NATURAL SCIENCE AND ENGINEERING
Physicists, Chemists
and Related
80
Architects, Engineers
70
and Related
60
50 Computing
40 Professionals
30
20 Mathematicians,
Statisticians and
10 Related
0 Life Science
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
Professionals
47
MIGRATION and BRAIN DRAIN
Canada
Canada Nat-Eng
8
Social Sciences
and Related
29 47 Education
Health
8
9 Culture
48
MIGRATION and BRAIN DRAIN
(Statistics SA, 1997)
Occupation Emigration Immigration Net Migration
Engineers 428 99 -329
Medical Practitioners 73 45 -28
Medical Specialists 26 4 -22
Dental Professions 58 2 -56
Education & Related 353 125 -228
Accountant & related 277 27 -250
Other 962 305 -657
Managerial 885 357 -528
Artisans 371 111 -260
49
SUPPLY / DEMAND TRENDS
< Four years in service
IT imported skills too expensive; short-term contracts
Business services subsector is fastest growing - 32% growth
over five years
Banking sector - 50% growth 1998 - 2003
Demand for all IT professionals - 50% growth
Need for experienced staff at senior level
Combination of business/ technical skills required
Oversupply in some areas e.g. MCSE
50
Sector Distribution By Selected Occupations
(1998 HSRC Labour Study)
Other computer
sciences
Computer systems
M ining & Quarrying
analyst & related
Electricity, gas & water supply
Trade
Finance
Computer Programmer
M anufacturing
Construction
Transport, storage & communication
Electrical & related
Services: government & non-government
engineering/technicians
Electrical engineers
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
51
Employment of Professionals
1998 - 2003
Services: No n- 121030
Go vernment 109094
651584
Services: Go vernment 616880
Finance 125044
94761
Transpo rt & 20190
Co mmunicatio n 16663
28697 2003
Trade
24690 1998
6595
Co nstructio n 6107
Electricity, Gas & Water 8729
Supply 8393
80526
M anufacturing
72813
14399
M ining and Quarrying 14604
0 20000 40000 60000 80000 100000 120000 140000
52
CURRENT and FORECAST GROWTH -
ENGINEERS
Electrical/Electronic
18000 Engineer
16000 Engineering
14000 Technologist
12000 Telecomms
Technologist
10000
Engineering
8000 Technician
6000 Telecoms
4000 Technician
2000 Other Engineers
0
1998 2003 Other
Technologists
53
CURRENT AND FORECAST GROWTH -
IT PROFESSIONALS
Computer
700 Programmers
Systems Analyst
600
Comms
500 Technologist
Multimedia Design
400
Network Design
300 Website Developer
200 Hardware support
100 Software support
Other
0
1998 2003
54
HR STRATEGIES
Salary structuring
Name your price ==> huge salaries
Innovative package structuring
Retention strategies
Cross-skilling
Increased emphasis on training
Career planning
Internal promotions
Working environment
flexibility / working at home / prestige / holiday leave /
promotion potential / share options
challenge of the job is important
55
ISSUES AND CHALLENGES
56
MAJOR ISSUES
Lack of appropriate skills base for the IT sector
Lack of liberalisation of the telecommunications
industry
Lack of a strong entrepreneurial base in the IT
industry
57
GENERAL ISSUES
Need for a national strategic vision
no national objectives
lack of coordination
education and training must be part of the national IT strategy (not
separate initiative)
Indicators are problematic
Cannot read the changing character of the IT industry
Difficult to assess current status in a meaningful way
Comparing apples with pears - inconsistent
No coordinated effort (yet) to streamline activities relating to
HR measurement
58
ISSUES: IT COMPETITIVENESS
Global vision lacking
No strong R& D culture
Notexploiting interface between developed / developing
world
Niche markets not exploited e.g. Security
E-commerce will be the driver of the future
Affirmative procurement policies not working
Lacking a ‘Made in South Africa’ label
59
ISSUES: ENABLING ENVIRONMENT
Fragmented government approach to IT industry
Ineffective industry / government interface
Fragmented / patchy roll-out of infrastructure
Indicators not appropriate for fast-changing sector
Access to finance is problematic; not enough incentives
Telecommunications Act (1996) inadequate
Existing bandwidth is under-utilised
Telkom monopoly is problematic
60
ISSUES: HR DEVELOPMENT
SeriousIT skills shortages in systems integration, higher-
level management
Pipeline of potential skills development is unco-ordinated
is not being addressed at schools; no IT MBA in
IT-literacy
South Africa
Privatesector is not close enough to educational institutions
to ensure development of relevant curricula
Brain drain is a reality
Current migration policies discourage recruitment of
international staff
61
ISSUES: CREATING AN
INFORMATION SOCIETY IN SA
Pool of IT-literate South Africans is too small and
elitist
Not enough awareness of broader IT-related
activities, including donors and private sector
IT-literacy is not promoted enough in the media
e.g. promotion on TV soaps, etc
62
RECOMMENDATIONS:
COMPETITIVENESS
Improve incentives to attract foreign investment
Create incentives for private sector to invest in retraining of staff
Develop co-ordinated structure to support SMME development in
the IT sector
Develop more appropriate IT-related indicators
63
RECOMMENDATIONS: ENABLING
ENVIRONMENT
Set national objectives for the IT industry
Stronger co-ordination between industry, government, associations
and stakeholders
Co-ordinating mechanism for IT-related associations
Strengthen SATRA - better guidelines/regulations
Re-evaluate reporting lines in government
Review Telecommunications Act
Investigate mechanisms to improve access to venture capital
64
RECOMMENDATIONS: HR
DEVELOPMENT
Establish strategy to actively encourage foreign nationals to work in SA
Identify potential sources of skilled labour
Work with donor communities to investigate the establishment of skills
development programmes
Create mechanisms to establish stronger linkages between educational
institutions, industry and government to ensure development of right skills mix
Entrepreneurial development training is required at secondary and tertiary
school levels
Include training as part of a national IT strategy
65
RECOMMENDATIONS:
INFORMATION SOCIETY
The emphasis on infrastructure roll-out, and public Internet access
will increase the demand for IT-related services
There is a need for innovative solutions to increase visibility of ICTs
Stronger relationships should be developed with the donor
community already working in Africa, to promote the development
of the Information Society
