India’s top software services companies are investing big in Africa, eager to win customers and market share in a continent that is home to fast-growing enterprises and under-developed technology infrastructure.
Lured by the growth potential of African economies and their burgeoning interest in technology, companies such as Tata Consultancy Services, Infosys and Wipro are fast expanding their employee base and delivery centres in a market that was earlier viewed as a low-cost , near-shore delivery location to serve large outsourcing customers in Europe and West Asia.
“IT services growth in the African continent is being strongly driven by government spends in IT infrastructure and services,” said Shailendra Singh, business director for Africa at Wipro, India’s third-largest software provider that is present in eight of the 54 countries. Wipro, which has 1,100 employees in Africa, will hire 1,000 people at its three centres in South Africa, Singh said. Tech Mahindra too is betting big on Africa.
“While we have 15-plus offices housing 2,500 people, Nigeria and South Africa have become delivery centres, not merely support bases,” said Girish Bhat, Africa business head at the Mumbai-based software provider. The company aims to take its revenue contribution from continent to double digits from 3% now. Rising interest in Africa is being fuelled by the growth of the middle-class and entry of Western and Asian MNCs into natural resources, manufacturing , and telecom sectors that has created a need to develop technology systems and infrastructure. Outsourcing advisory Everest expects revenue contribution from Africa to go up to 10-12 % over the next three years from 5-10 % now. “We see secular growth in all markets. We have forayed into even smaller markets like Ethiopia and Malawi, moving on from South Africa, Nigeria and Kenya,” said Venkatramana Gosavi, head, Infosys’ corebanking software Finacle business in Africa.
Finacle, which has 32 clients in Africa, won business from Kenya’s Equity Bank in February. While most technology companies have chosen South Africa as their African headquarters , many are expanding in fast-growing economies such as Uganda, Kenya, Nigeria and Ethiopia. Indian IT-BPO firms won 25 large outsourcing contracts in Africa over the past four years, said Everest’s principal analyst Anurag Srivastava. The IT market in Africa is pegged at $26.5 billion this year. For HCL Technologies, Africa accounts for 12.8% of the overall revenues.
“Africa in is one of the fastest growing geographies for HCL and a key area of management focus,” said Pradeep Bindal, resident, Asia, Middle East and Africa at HCL Technologies. But entering Africa comes with challenges. Industry experts say Indian IT companies face difficulties while finding the right technical talent and creating awareness about offshoring. Companies such as Infosys, Wipro and Tech Mahindra have been partnering with universities and offering internship programmes to expand the talent pool.
Gurmeet Chopra, country head, Africa, at outsourcing advisory firm Avasant said Indian IT companies have been winning businesses from enterprises that focus on mobile technologies, e-governance , skill development and social media.”While large companies strike deals on their own, most mid-sized companies partner with local service providers to build a foothold,” Chopra said.
