Global platform company, EMC is cautious about investing in Africa, despite the continent's fast-growing economy, because of cultural differences and economic strife.
Recently, the company reported its third-quarter results and said revenue and profit were at record highs. Revenue was $4.98 billion, an increase of 18% compared with the previous year, while attributable net income increased 28% year-over-year, to $606 million.
CEO and chairman Joe Tucci said: “I am very pleased with EMC's execution and solid third-quarter financial performance.” Revenue from EMC's Europe, Middle East and Africa region grew 15%.
However, despite the growth in revenue from the region, the company is still cautious about investing in Africa, and about expanding its South African base.
John O'Melia, VP of World Wide Services, says the company started seeing a shift - from most of its revenue coming from mature markets, towards a larger share coming from emerging markets. He explains the company used to fly in resources as needed, but now has a sizeable presence in SA, the Middle East, the Mediterranean and Eastern Europe.
O'Melia explains EMC is interested in countries that will show good economic growth. Africa is expected to outstrip developed economies in average gross domestic product growth this year. He was speaking to ITWeb on the sidelines of EMC's 2011 Momentum conference, in Berlin.
Although countries such as Nigeria are starting to emerge financially, there is a level of resistance that companies such as EMC must “get over”, says O'Melia. He points out that Nigeria and Somalia have both experienced bad press recently.
As a major organisation, EMC would need to walk carefully, and not run, as it must balance potential growth with challenges such as different cultures and political issues, says O'Melia.
EMC has a dedicated leadership team for the south of the Europe, Middle East and Africa region that develops a growth plan on a yearly basis, explains O'Melia. He says the company looks at several aspects, such as sales and services, and adjusts its plan accordingly.
O'Melia says EMC must understand the characteristics of each country, such as whether it would require an empowerment partner, to make the right investment.
In SA, the unit has a presence in Cape Town and Johannesburg, from where it serves other regions, says O'Melia. He explains there is “a way to go” before the company expands into other provinces.
However, as the Information Intelligence Group (IIG) unit “lives” within EMC, it can “piggyback” off another unit that could be ahead in terms of expansion, says O'Melia.
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