Africa offers greener pastures to Indian IT

by Ashwani Mishra    Nov 15, 2011

Wipro Technologies has announced its growth plans in Africa and said it plans to set up a strategic delivery centre in South Africa and create opportunities in the region for around 1000 skilled professionals in the next three years.

Wipro had chosen South Africa as a market for potential growth and created a special structure to drive global presence and business growth. Several Indian IT service providers are planting seeds for a long-term IT services play in the African continent.

These players do not want to lose the opportunity to replicate the low-cost, high-volume model that they have perfected in India.

“South Africa’s IT end-user spending as a portion of real gross domestic product will reach 8.6 percent in 2013. This takes the country (to) at the upper-middle level of IT spender nations within emerging markets,” says Manoj Punja, Senior Vice President and Head, Focus Markets and Global Sales Operations, Wipro Technologies.

He adds that factors like the time zone advantage, language, cultural compatibility and skill access makes South Africa a favorable destination for the growth of business process outsourcing and IT services. South Africa’s IT spending is projected to increase from US$10.7 billion in 2011 to about US$17.4 billion in 2015.

Wipro currently has an office in Johannesburg, South Africa and has around over 500 people onsite and offsite servicing its clients in the region. The company sees this region as a high potential market for growth and will help diversify its presence and portfolio, especially in the financial and telecommunications sector.

According to analyst reports, Indian IT companies are considering Africa as the market for the future. South Africa, Nigeria and Kenya in particular have large banks, telcos and manufacturing sectors where the potential to make inroads is substantial. Africa is of strategic importance to these IT companies and everyone wants to be a part of its development process.

In March this year, Infosys had shared that the company was looking at a bigger role play in Africa as they saw a huge potential for IT services. The company had said that it was preparing to bring various offshore IT services that it offered in larger markets such as application services, infrastructure management, package implementation and architecture services.

Tata Consultancy Services (TCS), which offers its TCS BaNCS suite of banking products in Africa, has two subsidiaries based in Morocco and South Africa. Early this year, the Nedbank Investor Services (NIS), a division of Nedbank, selected TCS BaNCS suite of products to replace its existing securities and custodial applications.

Pune-based Nihilent Technologies, a global consulting and solutions Integration Company, was one of the early players to enter the African market that now accounts for 75 percent of the company’s revenue.

“We do not have a significant presence in other markets, except Africa which is still growing at five percent annually. The focus on the African market helped us insulate our business from the global crisis over the years. There were hiccups because of the financial downturn, but we recovered faster than others,” says LC Singh, CEO, Nihilent Technologies.

In August, Tech Mahindra, a global systems integrator and business transformation consulting company, declared Nigeria as the headquarters for its BPO operations in Africa and elaborated on ambitious plans to scale up its African operations.

The company started customer care services in seven African countries as a partner of telecom giant Bharti Airtel. It recruited over thousand local employees in Nigeria, and as a part of the company strategy, it plans to nurture local talent for effectively executing its BPO operations.

“Over a period of two years, we plan to reduce the expat headcount considerably and develop workforce locally to run operations,” stated Sujit Baksi, President, Corporate Affairs & Business Services Group, Tech Mahindra in a media release.