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SAITIS BASELINE STUDIES

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Title: SAITIS BASELINE STUDIES


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 III IT Jobs and Skills in South Africa
  • International and National Trends in the IT
    Labour Market
  • Supply / demand trends
  • Remuneration
  • IT skills (current and future)
  • Part II The IT Industry in South Africa
  • National Trends
  • Regulatory/Policy Environment
  • Players in the IT industry
  • Status of the IT industry
  • 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 IT Software IT Services Office
Equipment Internal Telecomms TOTAL IT
Spend
7 450 8 020 9 459 9 259 9 903 10 425 1 742 2
003 2 343 2 769 3 843 4 062 5 319 5
695 6 679 6 053 7 298 8 937 795
838 1 032 959 898 941 7
358 7 863 8 063 8 779 9 016 9 265 16
186 17 286 18 354 24 699 25 409 25 191 38
858 41 705 45 925 52 512 56 361 58 833
7
Growth in Overall SA IT Vendor Revenues 1985 -
2002 (F)
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 Cellular Paging Vans Radio
Trunking Satellite Public Enterprises Internet Wir
eless Data
Telkom MTN, Vodacom Radiospoor,Autopage EDS
Africa, Firstnet, Trafex Fleet Call,
Q-Trunk Orbicom, Sentech, Telkom, Transtel Eskom,
Transtel Internet Solution, UUNET Internet
Africa, M-Web, Intekom,SAIX, Swiftnet, WBS
1 2 23 25 3 4 2 60 2

13
Worldwide Internet Growth
14
Number of South African Households with Internet
Access
1996 1997 1998 1999 2000 2001 2002 2003
Households with Internet access in the home
0.5 1.8 4.1 6.0 7.4 8.2
9.2 10.5
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(gt R 20 million per
year)
22
Large South African IT Users (continued)
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
  • RD, 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/te
    chnical 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
  • gt30 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 - gt80 had no social investment
  • 7 of total spent gt R 50 000
  • 15 of IT vendors spent over R 50 000
  • IT vendor profile
  • gt 50 of IT vendors were in services and
    consulting.
  • 44 in software development
  • 26 in training
  • gt50 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 ST 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 DRAINNew Zealand

47
MIGRATION and BRAIN DRAINCanada
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
  • lt 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)
51
Employment of Professionals1998 - 2003
52
CURRENT and FORECAST GROWTH - ENGINEERS
53
CURRENT AND FORECAST GROWTH - IT PROFESSIONALS
54
HR STRATEGIES
  • Salary structuring
  • Name your price gt 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
  • Not exploiting 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
  • Serious IT skills shortages in systems
    integration, higher-level management
  • Pipeline of potential skills development is
    unco-ordinated
  • IT-literacy is not being addressed at schools no
    IT MBA in South Africa
  • Private sector 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
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