A survey of the Western Cape information and communications technology (ICT) industry has found that there are about 1 200 companies employing 27 000 people in the region, making it the province`s second largest industry after tourism. The vast majority of the companies have less than 10 employees.
Cape IT Initiative (CITI) executive director Masedi Molosiwa released the results of a census of Western Cape ICT companies at an event last night to mark the organisation`s fifth year of operation.
The census` definition of the ICT sector was "the industries that provide goods and services that support the electronic display, processing, storage and transmission of information".
It pointed to strong growth in the small and medium enterprise sector, indicating strong entrepreneurial activity and innovation. The majority of companies in the sector are involved in software development and ICT consulting services, with a competitive advantage in application development, networks, customer service and quality. Exports make up a small percentage of their earnings.
The findings show the sector is dominated by very small companies, 60% of which have less than 10 employees and 58% of which have a turnover of below R2 million. Some 6% of the companies have more than 100 employees and another 6% have between 50 and 99 employees.
Eighty percent of the responding companies have less than 20% black ownership and 15% have more than 50% black ownership. Many of the respondents (104 companies, or 18% of those questioned) either refused to answer or did not know the answer.
Exports represent less than 20% of income
Of the 566 respondent companies interviewed, 32% export products and services to Africa, Europe and North America, the census found.
In-depth interviews with these exporting companies indicated that exports represent less than 20% of their income.
The largest number of exports (76%) goes to Africa, followed by Europe (32%) and North America (17%). Products and services exported range across the board but are dominated by software development (approximately 25%) and mobile telecommunications (approximately 8%), as well as Web development, outsourced services and consulting and Internet-related services. Some 16% of companies interviewed were successful in generating 50% of income from exports.
Database of companies
The census allowed the opportunity to compile an updated database of 1 077 ICT firms in the Western Cape. CITI will publish general details of the companies on its Web site.
Molosiwa says the data gathered on ICT companies, their markets, products, services and technical capabilities comprises a unique source to exploit and further develop the strengths of the ICT sector in the Western Cape.
"Results of the census have also facilitated a better understanding of the profile and technical capabilities of firms, especially the export orientation and export readiness of firms in the ICT cluster," he says.
Molosiwa says CITI was extremely encouraged by the results of the census, which indicated the growth of a dynamic, knowledge-based economy that had strategic importance in enhancing the country`s competitiveness and development challenges.
He says the study was equally significant in revealing ways in which collaboration between the public and private sectors could lead to more organised export and internationalisation efforts.
CITI initiated the census, with funding from the Western Cape provincial government and the City of Cape Town, in response to the need for in-depth and reliable information about the Western Cape`s ICT sector from local and international groups. A consortium of ICT consultants, including Miller Esselaar & Associates, Infonomics South Africa and Radian, conducted the research and analysis.
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