SOUTHERN AFRICAN MIGRATION PROJECT

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SAITIS:
A SURVEY OF THE IT INDUSTRY AND RELATED JOBS AND SKILLS IN SOUTH AFRICA

January 2000

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The SAITIS Baseline Studies provide an overview of the status of the Information and Communications industry in South Africa. The SAITIS Baseline Studies are the first output from the South African Industry Strategy Project (SAITIS), a three-year project launched by the Canadian International Development Agency (CIDA) and the Department of Trade and Industry (DTI), and executed by PricewaterhouseCoopers Canada. The project was conducted by four South African based organisations under the project management of the Canadian International Development Research Centre (IDRC).

The SAITIS Baseline Studies were originally intended to be two separate studies, namely:

  • The Status of the IT Industry in South Africa, and 
  • The Status of IT-related Jobs and Skills. 

On completion however, both studies were bound within one report, the content of which is presented below.

This study was commissioned by the Candian International Development Agency (CIDA), with additional support provided by the Acacia Programme of the Canadian International Development Research Centre (IDRC).
 

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Executive Summary
Project Overview

PART I - General Overview

1. Introduction

1.1 Background to the SAITIS Project
  1.2 Objectives of the Baseline Studies
    1.2.1 IT Industry Scan
    1.2.2 IT Jobs and Skills Scan

2. Defining the IT Industry

2.1 Introduction
  2.2 Applying the OECD Definition of the IT Industry
  2.3 Definition Constraints
  2.4 IT Usage by Industry category
    2.4.1 SIC and NAICS Classifications
  2.5 Categorisation of Jobs and Skills in the IT Industry
    2.5.1 Overview of Adopted Categorisation for the Study
    2.5.2 Definitions of Jobs and Skills

3. Methodology

3.1 General Approach and Assumptions
  3.2 Secondary Sources
  3.3 Interviews and Group Discussions
  3.4 Primary Data Gathering

4. Global Trends in the IT Industry

4.1 The Paradigm Shift from Manufacturing to Information Economy
  4.2 Global Economic Trends
  4.3 The Internet and e-commerce
    4.3.1 African Trends
  4.4 Outsourcing

PART II - The IT Industry in South Africa

5. National and Regional Context for the South African IT Industry

  5.1 The Socio-political Environment
    5.1.1 Population Characteristics
    5.1.2 Urbanisation
    5.1.3 Human Development
    5.1.4 HIV / AIDS
    5.1.5 Communications
    5.1.6 Employment
  5.2 The Economic Environment
    5.2.1 GEAR
    5.2.2 Privatisation and Liberalisation in the IT Industry
    5.2.3 Offshore Movement of South African IT Companies
  5.3 R & D investment
  5.4 The Internet and E-Commerce
  5.5 National Initiatives relating to the IT Industry
    5.5.1 The Foresight Process in South Africa
    5.5.2 Programmes of the Department of Trade and Industry
   
5.5.2.1 Sector Partnership Fund
  5.5.2.2 National Industrial Participation Programme
    5.5.3 THRIP
    5.5.4 Innovation Fund
    5.5.5 info.com
    5.5.6 Universal Service Agency (USA)
    5.5.7 The State Information Technology Agency (SITA) 
  5.6 National IT Education and Training Initiatives
    5.6.1 Schools
    5.6.2 Tertiary Institutions (Universities and Technikons)
    5.6.3 Government initiatives
   
5.6.3.1 Houwteq IT & Telecommunications Software Training and Development Centre
  5.6.3.2 Technology Enhanced Learning Initiative (TELI)
  5.6.3.3 SchoolNet SA
    5.6.4 Private Sector Initiatives
   
5.6.4.1 Telkom Centres of Excellence
  5.6.4.2 IBM Institute for Electronic Government
  5.6.4.3 EducationNet
  5.6.4.4 National Association of Distance Education Organisations of South Africa (NADEOSA)
  5.7 Provincial Initiatives Relating to the IT Industry
    5.7.1 Cape IT Initiative (CITI)
    5.7.2 Gauteng SDI
  5.8 Development Initiatives
    5.8.1 International Agencies
    5.8.2 National NGOs
  5.9 Regional IT Initiatives
    5.9.1 Southern African Development Community (SADC)
    5.9.2 Common Market for Eastern and Southern Africa (COMESA)
    5.9.3 African Connection
    5.9.4 African Information Society Initiative (AISI)

6. Defining the South African Regulatory and Policy Environment

6.1 International Context
  6.2 National Economic Policies
  6.3 Policy and Regulations Affecting the IT Sector
    6.3.1 The Telecommunications Regulatory Environment
   
6.3.1.1 Debate on Further Liberalisation
  6.3.1.2 Potential Constraints
    6.3.2 The Internet and E-Commerce
   
6.3.2.1 Trust
  6.3.2.2 Taxation
  6.3.2.3 Intellectual Property

7. Players in the IT Industry

7.1 Overview of the Industry
  7.2 Composition of the IT Industry
  7.3 Players
    7.3.1 IT Suppliers
   
7.3.1.1 The Telecommunications Services Industry
    7.3.2 IT Users
    7.3.3 IT Bodies and Associations

8. Status of the IT Industry in South Africa

8.1 Dimension of the Industry
  8.2 Turnover and Profitability
  8.3 IT Spend
  8.4 Investment Flows
  8.5 Revenue Earned by the IT Industry
    8.5.1 National and International Revenues
  8.6 IT Industry Revenues
  8.7 Hardware
    8.7.1 Mainframe, Midrange and PC Installed Base
    8.7.2 Computer Hardware Sales
  8.8 Software
    8.8.1 Software Sales by Software Type
    8.8.2 Sales of Locally Developed Packaged Software
  8.9 Telecommunications
    8.9.1 Infrastructure
   
8.9.1.1 Telkom
  8.9.1.2  Private Network Operators
  8.9.1.3 Cellular Network Operators
  8.10 Professional Services

PART III - Jobs and Skills in the IT Industry in South Africa

9. General Trends relating to Jobs and Skills in South Africa

9.1 The South African Labour Market
    9.1.1 Migration and the Brain Drain
    9.1.2 Equity and Empowerment in the IT Industry
    9.1.3 Current and Future Trends in the South African Labour Market
  9.2 Geographic Distribution of IT Professionals
  9.3 Unionisation in the IT Industry
  9.4 Legal Aspects relating to Jobs and Skills Development
  9.5 National Structures to Support Human Resource Development in South Africa
    9.5.1 South African Qualifications Authority (SAQA) and the National Qualifications Framework (NQF)

10. Supply and Demand of IT Skills

10.1 Overview
    10.1.1 International Recruitment
    10.1.2 Average Length of Service
    10.1.3 Job-finding in the IT Sector
    10.1.4 Availability of IT Professionals
  10.2 Current Levels of Employment in the IT Industry - the 1997 October Household Survey
  10.3 Current and Future Supply/Demand Trends –1998 HSRC Telecommunications and Labour Studies

11. Remuneration

11.1 Overview
  11.2 Salary Surveys
    11.2.1 Existing Salary Surveys - Contractors
    11.2.2 Annual Salary Rates – Permanent Staff
  11.3 Remuneration Strategies
  11.4 Retention strategies

12. Skills Required in the IT Industry

12.1 Overview
  12.2 Currently Available Skills Types

13. IT Jobs and Skills Scan

13.1 Introduction
  13.2 Primary Data Gathering
    13.2.1 Questionnaire Design
    13.2.2 Sample Design and Selection
  13.3 Limitations
  13.4 IT Jobs and Skills Scan Findings
    13.4.1 Sample Characteristics
    13.4.2 IT Expenditure
    13.4.3 IT Outsourcing
    13.4.4 IT Social Investment
    13.4.5 IT Research and Development
    13.4.6 International Revenue from IT Products and Services
    13.4.7 IT Products and Services
    13.4.8 IT Training Expenditure
    13.4.9 IT Skills
    13.4.10 IT Labour Supply and Demand
    13.4.11 Future Skills Needs

PART IV - Issues and Challenges Recommendations and Actions

14. Issues Facing the IT Industry

14.1 Overview
  14.2 Competitiveness
  14.3 The Enabling Environment
  14.4 Human Resource Development
  14.5 Creating the Information Society in South Africa

15. Recommendations and Actions

15.1 Competitiveness
  15.2  Enabling Environment
  15.3 Human Resource Development
  15.4 Creating an Information Society in South Africa

PART V - References - Appendices

Appendix 1: Individuals and Organisations Consulted
  Appendix 2: SIC and NAICS
  Appendix 3: SWOT Analysis emerging From the South African Foresight Process
  Appendix 4: Regulatory and Policy environment relating to E-Commerce
  Appendix 5:  An example of a Unit Standard
  Appendix 6:  Human Science Research Council Methodology
  Appendix 7: The Project Team
  Appendix 8: Questionnaire

LIST OF TABLES

Table 1: International Standard Classification (ISIC) codes
Table 2: SIC Divisions and Groups
Table 3:  IT Domains as Defined by the IT National Qualifications Framework (ITNQF)
Table 4: Changes in Techno-Economic Paradigm
Table 5:  Barriers to the Development of IT/Software Capabilities in Developing Countries
Table 6: Number of Households Having Access to Radios and TVs
Table 7: Percentage distribution of telecommunications in South African households
Table 8: Economically Active Population by Province Amongst those Aged 16 – 65 Years
Table 9: Economic Sector Amongst the Employed Aged 15 - 65 Years by Province
Table 10: Computer Sciences and Communication R&D Inputs by Sector (in R million)
Table 11: Grant Allocations by the National Research Foundation in IT
Table 12: Analysis and Forecast of Internet Access within SA Households, 1996 – 2003
Table 13: Notional Estimates of Key Internet and E-Commerce Indicators
Table 14: Number of Dial Up Subscribers by Leading ISP, 1996 – 1998
Table 15: Internet Service Providers International Bandwidth
Table 16: International Internet Bandwidth Forecast
Table 17: Summary of ICT SWOT Analysis
Table 18: The Innovation Fund: Budget and Focus Areas: 1997 - 1999
Table 19: Outline of the Department of Communication’s info.com 2025 Framework
Table 20: First degree graduates in Computer Science and Data Processing from South African Universities:1992 – 1996
Table 21: Projected Output of Electrical and Computer Science Graduates: 1997- 2002
Table 22: First Diplomas Awarded in Computer Science by Technikons: 1992 – 1996
Table 23: First Diplomas Awarded in Electrical Engineering by Technikons: 1992 – 1996
Table 24: Margins in OECD telecommunications sectors and the Potential Impact on Profits of Reforms
Table 25: OECD Assessment of Potential Sectoral Output, Employment and Price Effect of Regulatory Reform
Table 26: Market Capitaliation in the IT sector ( > R1 billion)
Table 27: Overview of the Major Listed IT Companies in South Africa
Table 28: Overview of some Major Multinational Companies Operating in South Africa
Table 29: The Telecommunications Services Market
Table 30: Large South African IT Users (Budget > R20 million per year)
Table 31: Overview of Large IT Users (not included in the IT Users Handbook)
Table 32: Electronics and Electrical Listed Companies on the Johannesburg Stock Exchange
Table 33: Information Technology Listed Companies on the Johannesburg Stock Exchange
Table 34: Telecommunications Listed Companies on the Johannesburg Stock Exchange
Table 35: IT Spend in the South African IT Industry ( in R million and US$ million)
Table 36: IT / GDP Ratios
Table 37: Growth in Major Segments of the IT Market SA - IT Growth Rates by Sector(R‘000s)
Table 38: Percentage Growth by Product / Service Segment
Table 39: IT Industry Revenues (1998)
Table 40: Notional Installed Base by Vertical Sector – December 1998
Table 41: Revenues Derived from Sales of Computer Hardware
Table 42: Revenues Derived from Sales of Computer Software
Table 43: Revenues Derived from Sales of Locally Developed Packaged Software
Table 44: Measures of the Telecommunication Industry
Table 45: Measures of Telkom’s Infrastructure
Table 46: Telkom Services
Table 47: Telkom Tariffs
Table 48: Telkom Group Financial Statistics ( R billion)
Table 49: Features of Transtel and Eskom
Table 50: Revenues Derived from Sales of IT Professional Services
Table 51: Migration Statistics for South African Professionals
Table 52: Overview of the Major Unions Active in the IT Industry (Including Telecommunications)
Table 53: Unionisation of IT-Related Employees in South Africa
Table 54: Employment in the IT Industry in South Africa by Occupation and Sector
Table 55: Current and Forecast Employment for Specified IT-related Professions in the Overall Labour Market, 1998 - 2003
Table 56: The Telecommunications Sector – Forecasts for Employment by Broad Occupation (1998 and 2003)
Table 57: Current and Forecast Professional Employment 1998 and 2003 in the Telecommunications Industry
Table 58: Hourly Contract Rates for IT Professionals : June – August 1999
Table 59: % Shortage of Permanent Staff
Table 60: Comparison of Three Salary Surveys for IT-related Occupations
Table 61: Number of Jobs Requesting a Particular Skill Type as a % of CV holders and Total Jobs Available (** = Top Ten)
Table 62: IT Vendors
Table 63: IT Users
Table 64: IT Vendors
Table 65: IT Users
Table 66: Total Employment by Province (1996 Census versus SAITIS survey)
Table 67: Total Employment by Economic Sector (1996 Census versus SAITIS survey)
Table 68: Number of Respondent Organisations by Economic Sector (in descending order)
Table 69: Respondent Organisations by Geographic Location
Table 70: Respondent Organisations by Company Classification
Table 71: Respondent Organisations by Size of Permanent Staff
Table 72: Respondent Organisations by Size of Permanent IT Staff
Table 73: Respondent Organisations by Size of Total Revenue
Table 74: Respondent Organisations by Size of IT Budget
Table 75: Respondent Organisations by Size of IT Payroll
Table 76: Respondent Organisations by Level of IT Outsourcing
Table 77: IT Outsourcing by Economic Sector
Table 78: Respondent Organisations by IT Social Investment
Table 79: Respondent Organisations by IT Research and Development
Table 80: IT Vendors by International Revenue
Table 81: IT Products and Services by Revenue
Table 82: IT Training Expenditure by Economic Sector
Table 83: IT Training Expenditure by Staff Size
Table 84: IT Training Expenditure by Revenue
Table 85: IT Staff by Economic Sector
Table 86: IT Skills Domains by Race and Gender
Table 87: IT Skills Domains by Race and Gender (%)
Table 88: IT Skills by Revenue
Table 89: IT Skills Supply and Demand
Table 90: Future IT Skills Needs
Table 91: Number of Interviews Conducted by Economic Sector for the Survey of Employers

LIST OF FIGURES

Figure 1:  Worldwide Growth in Users of the Internet and World Wide Web, 1997-2001
Figure 2:  Population Distribution by Gender and Age
Figure 3:  Comparison of Human Development Indices of South Africa’s Nine Provinces with Selected Countries
Figure 4:  Unemployment Levels by Race and Gender
Figure 5:  High-Speed Residential Internet Access Technology Subscriptions (Revenue-Generating Lines Only), USA, 1997 – 2001
Figure 6:  Device Unit Shipments vs Net Cellular Subscriber Additions (1996-2003)
Figure 7:  IT Sales by Sector
Figure 8:  Growth in Overall SA IT Vendor Revenues, 1985 – 2002(F)
Figure 9:  Canada Emigrants by Sub-categories
Figure 10: New Zealand Immigration Evolution of SA Natural Scientists and Engineers
Figure11: Skills Distribution of Black Economic Empowerment Companies
Figure 12:  Employment of Professionals per Broad Economic Sector 1998–2003
Figure 13:  Geographic Distribution of IT Professionals
Figure 14:  Sector Distribution by Selected Occupations
Figure 15:  Total Employment by Province (1996 Census versus SAITIS survey)
Figure 16:  Total Employment by Economic Sector (1996 Census vs SAITIS survey)
Figure 17:  Respondent Organisations by Size of Revenue
Figure 18:  Respondent Organisations by Size of IT Budget
Figure 19:  IT Vendors by International Revenue
Figure 20:  IT Skills by Race, Gender and Province
Figure 21:  Vacancies vs Recruitment vs Turnover
Figure 22:  Expected Increase in IT Staff by 2003

This page last updated 19 May 2004.