In most people’s minds, Africa might be a continent filled with famine, war and crime – but in fact, it is a huge business opportunity, as was discussed at the Nasscom India Product Conclave 2011: Whilst we tend to believe that the past decade was the decade of Asian growth, 6 out of 10 countries with the strongest GDP-growth were African countries. And here is another surprise: The biggest investor in Sub-Saharan Africa is not China or USA, but India. Apart from big industry players and consumer goods, there is potential for IT-companies as well.Some key facts about Africa:
- 50+ countries with a population of over 1 billion
- Most Africans live now under stable regimes, which pursue free markets
- The economy of the region grows by 5 per cent per year
- According to ICT estimates, Africa’s IT market has crossed over 22 billion $ in 2010. It will cross 25 billion $ in 2011, of which 3 billion $ are government-spent
- ICT is seen as a catalyst for development and is therefore high on the agenda of the governments
- Emerging locations are e.g. Egypt, South Africa, Ghana, Kenya
Speaking specifically of the telecom sector, the mobile telephony market has grown from 10 million subscribers in 2000 to over 400 million subscribers in 2010; the growth is expected to continue, and realizations are higher than in South Asia. One fifth of all mobile phones sold in Africa is a smartphone. Therefore, there is a need for all services connected to e-government, mobile solutions, as well as skill training, cloud computing or virtualization.
So, how do Indian businesses fit into this environment?
1.It’s the right time: This decade, economic growth is expected to be higher than in Asia.
2.Lesser competition: There are very few local competitors, and global competitors tend to focus on developed economies – also, western corporations face higher costs for sending their expats to Africa than Indian companies
3.Easier market penetration: With the right approach and partnerships, Africa can be a more cost effective market to penetrate into than developed markets such as UK or USA
4.Higher realization: The license realization is more than most Asian countries; the cost of support in the long run is lower compared to developed countries
5.Brand India: Brand India is No. 1 in terms of ICT, Africans have highest respect for Indian companies and professionals.
And some things in the African market are even easier to cope with than in the Indian market: E.g., African customers are fine with paying upfront; so, with the right contract, also the clients have interest in a succeeding project. Also, African clients do not need a lot of face-to-face meetings before closing contracts; video-conferences, email and phone are just fine – that helps saving time and money.
Already active in Africa are Tally, comviva, Tata, Infosys, Wipro, ZenSar, ApTech, HCL, NIIT and Mahindra Satyam – when will you follow?