An opportunity lost

South African software developers are a busy lot at the moment. Customised software development is swinging towards the provision of services and away from the traditional standalone application. Compliance is generating a great deal of work and new areas such as mobile, the Web and open source provide enormous opportunities.

According to a recent Savant survey, the South African software development industry is expected to grow to R21 billion by 2009 at a CAGR of 10%. There has always been a strong tradition of do-it-yourself in South Africa, and applications software represents nearly 40% of this total, according to the survey.

Savant, a joint marketing venture between the DTI and the private ICT industry to increase awareness of the local ICT sector, found there are at least 1 000 local development houses in the country, consisting of what it calls "mini" software vendors - those with 15 employees or less focusing on niche sectors; local software vendors which are higher up the chain; global software vendors which have a local office in SA; and systems integrators which typically employ some development skill in-house, but do not specialise in custom applications.

However, there isn't a single development shop in the country that has the numbers and levels of skills it needs to cope with the growth in customised software.

"There is a lack of intermediate skills," says Derek Hughes, CEO of local development house DVT. "Top-end developers are commanding a premium and corporate clients do not want junior developers. Due to a lack of training over the last decade, there are precious few middle-ranking developers available."

If we can't fulfil domestic demand, how can we consider global demand?

Derek Hughes, CEO, DVT

Hughes says the problem is compounded by the decline in the number of IT graduates in general in recent years, as the industry lost some of its dotcom attraction.

"Corporate clients know that projects succeed when good skills are deployed. Accordingly, they will not take a junior at even a third of the rate of an experienced person," says Hughes.

Legacy renewal and new application development are both driving demand for development skills and new application development is being fuelled by the preponderance of SAP R/3 in the corporate world.

"So many companies installed SAP that they're now all at parity," he notes. "They now know they need to innovate so as to compete again."

Because any kind of familiarity with custom development is a scarce thing, job-hopping among developers has become rife.

Hughes says developers will switch jobs for as little as a 20% to 30% premium over their current salaries.

"Many developers are also seeking to maximise their earnings with cash contracts. Any chance SA had of competing with India as an off-shoring software destination is gone. If we can't even fulfil domestic demand, how can we consider coping with global demand?

"The only chance we have of addressing the situation is if business, academia and government work together in a concerted drive," says Hughes. "In the short term, companies need to understand there is a premium to be paid, and they need to factor that into their budgets. They need to look at extending the life of existing systems, to look at more productive development methods and to call in experts, so as to augment people of lower skills."

It's a sobering point. India is still the powerhouse of outsourced development. A billion motivated people, a strong focus on science, engineering and computing in education, and lots of cheap bandwidth is not something that SA can emulate overnight.