South Africa will have a hard time convincing international players to participate in the local offshoring market, as long as local big businesses outsource to other destinations like South East Asia and China.
This is according to ZenSar Technologies, an outsourcing solutions provider with operations in SA and India.
Harish Lala, the company's country manager, says that while the local market is growing, SA stands on the back foot in the offshoring business. He says skills - more than other economic factors like the credit crunch and electricity crisis - is SA's biggest challenge.
"In India, there are planned blackouts on a regular basis, and with better infrastructure, SA should, in fact, be better off," he comments.
Lala says SA is competing with markets in Eastern Europe, the Far East and South Asia to capture and retain business. "These countries are moving swiftly to develop skills, and Europe and the US are looking at the best options they can get. The reality is that skills [in SA] need to be developed at a faster rate than they are currently."
SA's skills shortage has resulted in local, larger organisations being forced to investigate outsourcing destinations. This makes it difficult to convince international business that it is a viable offshoring destination.
"From a cost optimisation perspective, countries are doing what they can to hang on to international business," says Lala.
Opportunity knocks
A recently published Gartner research report bolstered India's overall position in the offshoring market. According to the report, India has an edge over other offshore locations, because of the quality of labour.
"Whether it is the indigenous India-centric service providers that have a wide-reaching impact on the IT services sector, or a vast and growing IT labour pool being trained to support a global client base, India will continue to be the most-sophisticated country option to source offshore IT services in the near-term."
The report says offshoring locations will be reinforced by the US economic slowdown that will drive businesses to look at the cost implications of local versus offshored skills.
Says Lala: "The international trend described by Gartner is an opportunity for SA. However, skills development will be imperative for SA to gain more ground against the stronger international players."
Slow skilling
Results of a global research report, published by the Computing Technology Industry Association and the Centre for Strategy Research, shows that, while the lack of skills plagues both established and emerging markets, emerging markets like SA and India are some of the hardest hit.
Of the 10 ICT professions identified, emerging countries showed shortages in eight.
However, Lala says the Indian market is aggressively up-skilling along with other international offshoring destinations, while SA is battling to retain or maintain ICT skills.
SA's Department of Labour (DOL) earlier this month recognised the country's critical lack of ICT skills in its "National Master Scarce Skills List". It indicated the country was short of around 37 565 skilled ICT workers.
The list, drawn up by the DOL in combination with the sector education and training authorities and government information, is intended to assist with the creation of skills development interventions. According to the DOL, it will also enable the Department of Education to steer students towards these high-demand areas.
Also this month, the presidential Joint Initiative for Priority Skills Acquisition handed over the ICT skills challenge to the Department of Communications, saying it had done enough for technology skills development.
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