Subscribe

SA needs to skill up


Johannesburg, 01 Aug 2006

SA has the potential to be a great offshoring destination, but, with an already stretched labour pool, will need to skill up drastically to achieve this potential, says a Gartner analyst.

SA, already on Gartner`s "can do business here" list as an outsourcing destination, is pitching itself as a low labour-cost destination. Gartner analyst Linda Cohen says that, instead, it should focus on "skilling-up" an already stretched pool.

She has called on government and technology companies to invest in training.

IT outsourcing is expected to grow at a compound annual growth rate of 6.9% between now and 2009. Business process outsourcing`s (BPO`s) growth rate is 9.1%. In 2004, the global IT services market was worth $582 billion. By 2009, it will be worth $760 billion, with most of the deals signed emanating from BPO.

With 2010 approaching, Cohen expects to see an increase in the amount of offshoring done by local companies as the desire to speed up implementation becomes an imperative.

She says service providers, which have expertise in areas including ticketing, crowd control and security, are likely to pitch their services to local companies.

Globally, BPO is on a growth track and will grow faster than IT outsourcing, she says. However, a trend Gartner has picked up is about 90% of all deals signed are about cost, without thought being given to other issues such as time zones.

Cohen says this is untenable, and companies need to focus on what they need out of outsourcing before simply offshoring. SA, for example, has a convenient time zone for Europe as a near-shore destination. It also has potential to be an offshore destination for the US.

India`s technical skills improved 14% last year as the country repositioned itself for a time when it is no longer the lowest-cost destination.

Share