Paracon: Demand outstrips supply

By Kimberly Guest for Paracon

Johannesburg, 13 May 2008

JSE-listed ICT resources provider Paracon Holdings continues to post strong performances. However, CEO Mark Jurgens says SA's skills issues are biting.

The company yesterday posted a 15% increase in half-year turnover to R439 million. Earnings per share (EPS) and headline EPS increased 24% to 10.1c.

"We have yet to see the economic climate impact on the demand for ICT skills. On that side, not much has changed; everyone is looking for the 'right' skills. However, I am concerned about the supply of skills in the market. It's not just a case of not enough, or the cost of skills, but also the fact that most university leavers do not have the aptitude for our requirements," explains Jurgens.

Although Paracon has seen some relief through the importing of skills from Indian partner, Nihilent, Jurgens reveals it is difficult to get these people to stay in the country.

"It costs us a lot to bring them out to SA and when they realise the crime levels that pervade our communities, they want to return. It's a huge problem which we can do nothing about. I called president Thabo Mbeki about it, but he won't return my calls," he says.

As a result, the company is increasingly offering the offshoring of skills to Nihilent as a way to reduce pressure on the local skills base and to enable customers to reduce labour costs.

An even greater concern, notes Jurgens, is the high number of skills that are leaving the company to pursue a life abroad.

"About 30% to 40% of our leavers are emigrating. It would be one thing if these skills were returning to competitors, because then they would still be in the skills pool. But they're leaving the country, which places even more pressure on skills availability locally."

Paracon's share price rose 2% to close at R2 yesterday.