Microsoft has released figures from a BMI-TechKnowledge survey showing that Microsoft-related business contributed over R9.6 billion to the South African economy last year.
While the study could be seen as Microsoft`s move to determine how successful open source software is in the local public sector, Microsoft South Africa MD Gordon Frazer says the study was done primarily to determine IT`s contribution to the economy.
According to BMI-T senior analyst Mark Walker, the study commenced in May and concluded in June 2004 and was a localisation of a worldwide International Data Corporation study conducted in 2002.
The methodology used in the study was also used in similar exercises in Canada and Australia.
"The study relied on primary and secondary research to inform market expenditure attributed to Microsoft SA and its channel partners from the purchases, by the demand side, of product and professional services," the report says.
The research group estimated business and salary expenditures, taxes and salary expenditures based on external sources, including Stats SA, the Department of Labour, SARS and various industry associations.
It also quantified the number of jobs in the IT industry and separated those directly associated with the sales and services of the software giant`s products.
Key findings
The R9.6 billion that Microsoft contributed translates into a 0.8% contribution to SA`s total GDP of R1.3 trillion for the period under consideration.
According to BMI-T, the services industries are growing in importance as the economy evolves. As this happens, IT usage will become pervasive and will increase its contribution to the economy.
BMI-T excluded supply side household expenditure (R1.249 million) and repatriated software revenues (R1.472 million) from the total contribution.
Software revenues that are repatriated to Microsoft International were also excluded from the total contribution because those revenues do not contribute to the local economy.
The company`s business expenditure amounted to R535 million, while the channel expenditure was R3.196 billion (operating expenses, taxes and salaries were included in the calculation).
The end-user contribution to the software company amounted to R8.6 billion. This takes into account the demand side expenditure on its products and services, plus business expenditure specific to the upkeep of infrastructure and personnel dedicated to the development and maintenance of those products.
The local division employs approximately 260 local people and its channel employs 7 735 people, while the demand side organisations employ 18 000 individuals in Microsoft-related positions.
Looking ahead
The report found that expenditure on technology is changing, from provision of infrastructure such as hardware and basic software systems, to an increasing emphasis on the provision of services and solution-focused software as the market matures.
BMI-T expects expenditure on technology to grow at an 8.5% compound annual growth rate between 2003 and 2008.
As IT expenditure is progressively related to business improvement, the need for advanced skills in the IT sector will grow, says the report. Expenditure by the demand side will be underpinned by needs for greater business efficiency, process improvement, cost control, innovation and competitive advantage.
As economies mature and become more service-oriented, IT will contribute more to overall GDP.
Speaking at the company`s partner summit in Sun City last week, Frazer pointed out that the IT industry is making a substantial contribution to the country`s GDP.
With about 11 000 IT companies, and a PC install base in the region of four million, he estimates that the IT spend could reach about R41.5 billion this year.
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