The value of South Africa’s information communications and technology (ICT) sector is estimated to have grown by 9,7% to R45,6-billion in 2004.
It is expected to rise by 8,8% in 2005, after it grew by only 1% to R41,5-billion in 2003, according to market analysts BMI-TechKnowledge (BMI-T).
There are 62 100 IT professionals and 30 000 others employed by various players in the sector, while its contribution to the gross domestic product — at R1,4-trillion — is about 11%, a figure that is seen growing on the back of the imminent telecommunications sector overhaul.
Microsoft South Africa notes that salaries in the industry are almost five times higher than South Africa’s average salaries.
BMI-T says South Africa is increasingly becoming a regional hub, which bodes well for growth in IT spend, and a host of drivers will yield positive results. Notable factors include technology simplification, software replacement, mobility and a surge in IT spend by small business entities.
IT industry growth is remarkably consistent and robust, says Microsoft SA’s business and marketing director, Mike Cathie. Microsoft SA contributed — directly and indirectly — R9,6-billion to the economy in the year ended August 2004, and Microsoft-related employment accounts for about 26 000 of the 62 100 IT professionals.
Despite various regional economic challenges, the industry grew at a compound annual growth rate (CAGR) of 11% from 1998 to 2003.
“Particularly telling is the fact that IT industry growth outpaced the growth of South Africa’s broader economy during this period. The recent global economic downturn notwithstanding, the South African IT industry is projected to grow at a CAGR of 8,5% between 2003 and 2008,” Cathie says.
Allied Electronics Corporation (Altron) sees conditions in the IT industry remaining an ongoing challenge, although there are profitable growth opportunities in the smart-card area.
“Our group is currently benefiting from opportunities in terms of the conversion to the Europay Mastercard Visa standard,” notes Altron CE Robert Venter, adding that it is likely that there will be further consolidation in the South African IT industry.
The Altron group’s acquisition of CS Computer Services has reached an advanced stage.
The Altron group comprises Altron and its 54%-held Allied Technologies and 55%-held Bytes Technology Group listed subsidiaries.
Datacentrix director Klaas Lammers concurs with BMI-T on the need to refresh software as one of the important drivers in 2005. He says it has been a long time since companies invested in Y2K IT and the circle is coming to an end, making way for new equipment and technologies.
The new year will see a significant rise in hardware and software sales, as well as higher IT services consumption, Lammers adds.
Datacentrix noted recently that its infrastructure division has enjoyed healthy growth from the public sector and that the division continues to win substantial multi-year product and services deals with large blue-chip organisations.
In November, the government-held State Information Technology Agency unveiled a list of preferred suppliers for a R2,5-billion tender over the next five years.
Hewlett Packard — one of the multinational companies the agency named for the government’s biggest ICT deal to date — commands a 58% share in the commercial mono-laser market. Since the company is the number-one vendor of all PC categories, it looks set to benefit from improved PC sales on the back of what has been described as the next major corporate renewal wave.
Datacentrix was also named a preferred supplier, along with African Legend Technologies, Bytes, IBM, Lesedi, Mustek, Siemens, Xon Systems and 22 other ICT firms.
The agency tender process is at an advanced stage and should be finalised in January. — I-Net Bridge