The South African technology sector will drive the creation of nearly 2 300 new businesses and 95 000 new jobs between the end of 2009 and the end of 2013 – more than six times the growth of total job creation in South Africa.
According to a study by International Data Corporation (IDC), most of the new companies will be small and locally-owned organisations, and the jobs will be highly-skilled, high-quality jobs.
The research forecasts the creation of 5,8-million new jobs worldwide and 75 000 new businesses over the next four years.
The IDC study, commissioned by Microsoft, investigates the contribution of IT to gross domestic product (GDP) in the 52 countries that represent 98% of worldwide IT spend. It also looks at job creation in the IT industry, employment in the software sector, formation of new companies, local IT spending and tax revenues.
The research found that, in South Africa, Microsoft and its ecosystem of local partners, vendors and service providers are a major catalyst of local economic growth and opportunity, during both the current economic difficulties and recovery.
Globally, spending on IT will reach $1,4-trillion worldwide in 2009, and is expected to grow 3,3% percent a year for the next four years.
Local spending on IT will reach R97-billion in 2009, and is expected to grow to R125-billion by 2013 for a compounded rate of growth of 5,5% percent. IT-related activities will generate R29-billion in taxes in 2009, and by 2013, IT tax revenues as a percentage of GDP will increase from 1,3% to 1,37%.
In 2009, local partners in the Microsoft ecosystem – that is, local companies that develop and/or sell products that run with or on Microsoft software, or that service and distribute Microsoft software – will generate more than R37-billion in revenues.
To generate these revenues, they will invest nearly R12-billion in development, marketing, training and sales in the local economy.
Mteto Nyati, managing director of Microsoft SA, says the research highlights that the partner ecosystem is a critical economic catalyst in every country the company operates in. For every R1.00 that Microsoft generates in 2009, local companies in this ecosystem will generate R11,25.
“This research underlines the fact that the technology industry will play a vital role in driving economic recovery and supporting sustainable economic growth in South Africa,” says Nyati.
“But it’s important to note that our impact is not only a commercial one. We’re working harder than ever to foster innovation and invest in education and skills development for all South Africans – which is vital if we’re to make any sort of headway in the global marketplace.”
The IDC’s Mark Walker says that the South African technology workplace has grown substantially since 2004, when this study was first completed.
“At that stage, total IT employment stood at just over 260 000. This has grown by about 65% to reach close on 430 000 this year,” he says.
IT sector employment in South Africa is expected to reach over 524 000 people by 2013. Microsoft’s Student2Business internship programme between ICT employers and training providers has contributed to this figure by funding 1750 student internships in the IT and related industries in South Africa since April 2007, and will train another 2 000 students in the next three years.
“Through this initiative, the private sector is able to share the obligation of accelerated growth in the IT industry and the broader economy, by specifically focusing on ICT and business students in South Africa,” says Nyati.
The study found that IT spending on software creates a disproportionate share of the skilled job growth.
“Software drives activity in the services and distribution sectors, as well as in organisations using IT," says Walker. "While software spending represents only 12% percent of South Africa’s total IT spend, it drives 47% of employment in the IT industry through creating, distributing, installing or servicing software."
The software sector is already a major employer in its own right. Companies in the Microsoft ecosystem employ 44 000 people; IT-using organisations employ another 132 000 IT professionals who work with Microsoft software or the products and services based on it. Together, these employees will account for 41% of IT-related employment in 2009 and 45% of IT-related taxes in the country.