Microsoft SA is wrapping up its empowerment strategy and will make an announcement once the plan has been submitted to, and approved by, the Department of Trade and Industry (DTI).
An equity equivalency deal, which will see the company spend millions on training instead of selling stock, should be announced in the next two months, if the DTI approves the proposed plan.
Vis Naidoo, head of citizenship at Microsoft SA, says the company is finalising its broad-based black economic empowerment strategy. "That strategy... will be publicly announced once it has been submitted to, and been approved by, the DTI."
Addressing delegates at last week`s Microsoft Partner Summit, in Durban, MD Mteto Nyati said: "We are right now in the process of getting necessary approval from the Department of Trade and Industry... to do equity equivalency."
He said the company will also make a "huge investment" in SA, but could not provide any further details.
The company is a level six empowerment contributor and will be at level four by the end of this month, but is ultimately aiming at becoming a level two provider, the second-highest possible level. Level six is two steps above being considered a non-empowered supplier.
Nyati added that another aspect of empowerment, separate to the equity equivalency strategy that Microsoft is finalising, is to make three senior posts available for training. He explained the company will hire three empowerment candidates at a time and train them for positions in the company.
As the trainees are hired, their slots will be filled by others, who will also receive training. Nyati explained the programme allows Microsoft SA to hire senior previously-disadvantaged people, without threatening existing staff.
"We need to start reflecting South African society more," he said. "I have been given an additional head count over and above the normal head count, so I can bring in people at senior level in an environment free of risk, keep them, let them gain an understanding of Microsoft and, once they are comfortable, appoint them into key jobs." Budget has been made available for this in perpetuity.
Globally, Microsoft, which was founded in 1975, has 93 736 staff and earned $58.44 billion in revenue last year.
Multinational conundrum
As many international companies operating in SA cannot easily sell equity to local groups due to the structure of their holding companies, some have applied for exemption.
This requires that other areas of the empowerment scorecard, such as training and equity among staff, make up the difference.
IBM is one such company that opted to follow the equity equivalence route. The company has focused its efforts on training and increasing its staff complement.
Two years ago, Hewlett-Packard became the first multinational to be exempted from selling 30% of its business to an empowerment partner. Instead, it agreed with government that it would invest millions in a new business institute to provide training for 1 800 students over the next six years.
Vital deal
Irnest Kaplan, MD of Kaplan Equity Analysts, says the question of selling equity is a difficult one for multinationals, as the ownership structure is often offshore.
Due to Microsoft`s prevalence in the software industry, Kaplan says an empowerment deal will be important, as Microsoft is vital for many companies, both from a user point of view and a service provider perspective. "Microsoft is an integral part of the IT setup in SA due to all this software."
He says an empowerment deal will be beneficial if done properly and could result in huge training opportunities. Microsoft may have already put other aspects of the scorecard into place, Kaplan adds.
The DTI did not respond to a request for comment.
(Samantha Perry was hosted at the Microsoft Partner Summit by Microsoft.)
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