South Africa and IT Outsourcing – A Growing Relationship

South Africa. Image Source

The IT services market in South Africa is healthy and well as it is expected to reach R53.3 billion by the year 2015. This South African Forecast and IT services Market Sizing forecast is courtesy of BMI Techknowledge (BMI-T). Based on the positive forecast the South African market is still a viable option for all the IT players regardless of whether it is a vendor, integrator or service provider.

The outsourcing role in the South African market

The last three years saw increasing support for the outsourcing industry in South Africa. The supportive foundation laid over the past three years will play a crucial role in the future, especially in the following two years. KPMG also investigated the role of outsourcing and concurred with the sentiment of support for the industry.

The report by KPMG is called, “South African Sourcing Pulse Survey: Shared Services and Outsourcing Advisory Practice, Management Consulting”. The survey released in September of 2012 spoke about a favorable environment for adoption of outsourcing in South Africa.

What are the factors bolstering outsourcing?

The KPMG survey and the industry insiders believe that the South African outsourcing industry is at its peak. What are the bolstering factors to the industry’s growth? The factors gain even more spotlight as the economies around the world are feeling the negative pressure.

Some industry insiders believe that the growth of the industry is owed to its evolutionary nature. The industry is moving and morphing according to the needs of the clients and this ability to shift and accommodate the clients is what makes the industry desirable.

The hosting and managed services segments are the ones in particular that have received accolade in the past three years. These services are completely customizable, allowing the client to choose the specific outsourced services like security or end user device management instead of having to outsource an entire IT team. This means that the outsourcing company can tailor their services according to the client’s requests and needs.

Despite this level of customization, the basic foundation of outsourcing remains intact. The organizations that are the clients benefit from the specialist insights and systems integrated with outsourcing. Further, the technology advancements make everyday operations run a lot smoother.

The Service Level Agreement or SLA states that outsourcers will take responsibility and ownership of managing the customer’s information operations and infrastructure whether all of it or small portions are outsourced.

External factors that favors IT outsourcing

Technology influences from the environment often affect how an industry functions. The same holds true for the outsourcing industry. The development and implementation of the industry is contributed to by factors such as the network, connectivity, Government and infrastructure availability.

Development in communication

Communication in the current day and age is a myriad of connections from messaging to VoIP and telephones, the need for communication can be met in a whole range of ways. This convergence of communication methods including telecommunication, IT, mobile technology and broadband connectivity is called the Unified Communications and Collaboration (UCC). The adoption of mobile and wireless technologies is affected by the UCC. With the extensive use of the UCC, it is not surprising that the space is seeing continuing development. This development is affecting the traditional network design and IT infrastructure world.

Given the developments in the UCC domain, it would make more sense to partner with an outsourcing company that has a thorough knowledge of the domain so as to take the guesswork out of the contract.

The IT environments are not getting any simpler, conversely they are getting increasingly convoluted by the day. Outsourcing is the one industry that has the potential to simplify the IT jargon, even as it gets more convoluted by the day. This relationship is the sustaining factor for the outsourcing industry.

Increase in skilled human resource

While most organizations boast of IT departments, they might not have the manpower or the skilled labor to handle all the work in the IT department. The complex IT infrastructure demands a skilled technical force provided by the outsourcing industry.

Through sending the business process offshore, companies can concentrate all their efforts and resources on the core business. The partner company can provide the latest in technological advancements to further the business. With the industry evolving and getting better every day, it is imperative that the service providers are up to date with the advancements.

One of the ways that the service provider industry can be bolstered is through continuing education and training programs. By maintaining and increasing the technical expertise, the clients and the providers benefit from the partnership.

Outsourcing in South Africa on a steady incline

The research group IDC, in a report stated that the IT spending in the country is all set to reach 17.42 billion dollars by the year 2016 as it is growing at a CAGR or Compound Annual Growth Rate of 6.2%. The report suggested that the outsourcing industry contributed a major chunk in the projected growth.

The manner of service provision in South Africa in the IT industry is making all the difference in the outsourcing health. The industry recognizes that outsourcing allows local organizations to wholly embrace the latest technologies either with regard to UCC, mobility or even cloud computing. The service provider industry provides the clients a chance to benefit from utilizing companies that are totally focused on the technology making them technology business enablers. A combination of all these factors is ensuring the outsourcing industry’s growth.

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  1. BidServices says:

    It seems that IT outsourcing is likely to flourish in South African economy. The result is somewhat favorable too. Nice post!

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