ROOM FOR GROWTH

It seems quite befitting that this year, the year of the tiger (according to the Chinese calendar) trade between South Africa and India is expected to rise to new heights of R20 billion.

Over the last decade, bilateral trade between South Africa and India, which has invested heavily in the domestic automotive and steel industries, grew steadily from R200 million in 1995 to R18 billion in 2007.

No surprise then that India - the world`s 12th largest economy and the third largest in terms of purchasing power parity - has become South Africa`s largest trading partner in South and South-East Asia and one of South Africa`s top ten trading partners globally.

At the time of President Jacob Zuma" rel=tag>Jacob Zuma`s inauguration last year, there were several reports indicating that India`s ties with South Africa were set to witness an upswing, as he had made it clear that the countries which strongly supported the anti-apartheid movement would remain special for his government.

(According to www.indianindustry.com, India was the first country to sever trade relations with the apartheid government [1946], and impose a complete - diplomatic, commercial, cultural and sports - embargo on South Africa.)

Zuma is even tipped to make his first official state visit to India in early 2010, with the aim of further strengthening relations and increasing trade between the two countries.

Yet, despite abundant encouragement in the form of various co-operation agreements with India, covering the technology, telecoms and small business enterprises sectors, when you think of Indian companies investing in SA, manufacturing giants like Tata, Mahindra and Ranbaxy seem to dominate trade news, while ICT companies are few and far between.

PROUDLY SA

The multinational Tata conglomerate does have ICT arms, in the form of Tata Communications - which owns a majority 56% share in SNO Neotel, and Tata Consultancy Services, which also has a presence in South Africa. But, Neotel presents itself as a South African company.

Another company you may have thought had Indian roots or ties is Sahara Computers, though it too is a South African company that happens to do business in India, among other regions in the Far East, Europe and Southern Africa.

Sahara, founded in 1997, assembles and markets personal computers and peripherals.

In Southern Africa it is active in South Africa, Botswana, Kenya and Mozambique.

In fact, in June 2009, it launched a PC assembly plant in Maputo, Mozambique, together with the Mozambique Information & Communication Technology Institute.

The facility`s signature product range is distributed as a proudly Mozambican product to the growing reseller network in the region.

Last year also saw Hyderabad-based software solutions provider SoftPro Systems buy South Africa`s Cura Software Solutions for $19 million.

Cura, established in 2002, provides software solutions for governance, risk management, compliance and performance management.

Established in 1994, SoftPro meanwhile, caters to the banking, finance, insurance, retail, telecom and manufacturing sectors, offering a range of technology solutions including enterprise portals, application software development and e-learning solutions.

At the time of the deal, Cura had 100 staff in four countries, distributors in another 10 countries, served over 200 customers and has achieved year-on-year revenue and profit growth for the past four years.

SoftPro intended, at the time, to grow Cura into a company with over $150 million in revenue by 2014. It would fund the business, set up a second research and development location and start marketing Cura`s solutions in India, it said.

INVESTMENT SUCCESS STORY

One Indian company making quite a sizeable investment in the local ICT sector is ZenSar Technologies, a global IT services and business process outsourcer.

With a presence founded in SA in 2001, ZenSar has steadily been building up its portfolio of local clients, by "developing relationships" and focusing on particular markets, such as the manufacturing, retail, government, and banking, financial services and insurance markets.

"Our entry into South Africa was part of a global strategy," explains ZenSar Technologies country manager Harish Lala. "We planned to focus on several emerging markets, including South Africa, China, Asia Pacific, Eastern Europe and Latin America, rather than just the US and UK."

That strategy seems to have paid off, given that in 2001, 5% of its revenue was generated from business in the `rest of the world` compared with 32% of its nearly US$200 million in revenue for 2008/9 generated from this market.

ZenSar currently has more than 400 staff dedicated to its South African operations, although only 250 of these people are based in the country - 17 of whom are at its head office and the rest of whom are based onsite at its clients. The other staff members dedicated to this operation are based offshore.

But, faced with a growing business, the escalating costs of bringing skills from overseas, and a seeming preference from its European clients for dealing with Joburg-based staff from a culture and time-zone perspective, ZenSar is making an effort to train local skills and integrate them into the global development platform.

While the company has offices in nearly 20 countries worldwide, its development centres are based in Pune and Hyderabad, in India, and Gdansk in Poland.

Late last year, the company announced the launch of its Learnership Development Programme, which aims to create 120 industry-ready individuals within the first year of the programme. The company is investing between R10 million and R12 million on training these individuals.

The first 40 students left South Africa in December to join the international training programme, held in Pune. They will finish their training in the last week of February, and will then begin their year-long internships with ZenSar clients in South Africa. The second intake of students is expected in March this year.

The programme will equip students with crucial IT skills, such as software development and testing to ensure they are eligible for quality jobs.

"We have integrated the students into the clients` needs from the start, and the idea is to employ as many of the students as possible once their training is complete," says Lala.

TRAIN OR BE DAMNED

But why send the students to India to train? Why not just train them here in South Africa? "As a global company, the world is pretty flat for us. Client account management, development and testing all have to work together though they be scattered across the world, so our staff have to be able to keep pace internationally. Although the costs of international training are higher, the returns are also higher," he points out.

Of course, staff attrition is reality and a concern for many a company investing heavily in training.

However, says ZenSar Technologies account manager Sarvesh Batta, who is very involved in training, one way of countering the attrition is to give the students the clarity of career development plan. "Young people especially look at building their careers, and we try to give them the right environment in which to do so," he explains. "But, if they still leave us, we will have grown the industry and hopefully got the respect of our clients. You can`t avoid training, as you will lose out," Batta adds.

And, with South Africa`s ICT leadership position in the continent, South Africa has great potential to be used as a catalyst into the rest of the African market. Of course it`s not without its challenges, although things have improved. Since iWeek last spoke with him in 2006 on the subject, Lala says the high cost of bandwidth has come down. "And once the Seacom cable is fully operational, they will come down even further," Lala observes.

As he pointed out last time, cheap bandwidth in India has been the major factor in enabling its status as a global outsourcing powerhouse.

As for ZenSar`s goals for the year, it intends stabilising its newly established Cape Town operation and landing some more "big opportunities" in the region. It is also keen to cultivate a client base in the local telecoms market.

ZenSar`s longer term focus, however, is moving into Africa on the back of its relationship with existing clients. It is already working in Nigeria, but has plans to move into the Kenyan, Botswanan, Namibian and Mauritian markets.

Later this year it will also be establishing a new development centre in Johannesburg, its first on the continent. "2010 is quite a crucial year for us," concludes Lala.

HIDDEN TIGER

In his keynote address at last year`s "Doing Business with India Conference", SA`s Minister for International Relations and Cooperation at the time, Maite Nkoane-Mashabane.Nkoane-Mashabane, said: "India as a trading partner should not be underestimated."

Nkoane-Mashabane noted that India`s investment in SA has grown "remarkably both in quantity and diversity", and singled out the Taj Hotels group, which has planned to invest the equivalent of R550 million to build hotels in Cape Town, Durban and Johannesburg.

"Indian call centre companies also have plans to create 5 000 new jobs for South Africans," he added.

Nkoane-Mashabane said although a number of South African companies like brewer SAB-Miller and the Airports Company of SA have made big investments in India, local firms were "still scratching the surface and need to take full advantage of the opportunities that India offers".

In terms of ICT, in 2006, India`s software industry exports were estimated to be worth a staggering $25.8 billion, up from $100 million in 1992. How its exports grew so fast is a tale that included the dotcom boom, the Year 2000, a push to a culture of science and engineering skills, and a motivated population of over a billion people.

With trade between the two countries booming and memoranda of understanding signed between the two countries in the ICT field, Indian influence in the local IT market was set to rise fast.

The South African market was certain to benefit from the expertise and investment India was bringing, but also needed to be prepared for some serious competition.

"South Africa has been on Indian companies` radars for a number of years," said ZenSar`s Lala at the time. "Most companies investing here see it as an expansion of markets."

But have these ICT investments emerged as expected? While Tata has grown its shareholding in Neotel to a majority 56%, and ZenSar is investing heavily in the Southern African region, Indian investment into SA`s ICT sector, and vice versa, hasn`t quite matched expectations.