The research report presents a comprehensive segmentation of the IT outsourcing market in Africa by government, BFSI, telecommunications, healthcare, and others. The report provides a market share analysis of the leading companies in the market such as Accenture, CSC, HP, and IBM. The top countries covered in this report include Nigeria, Kenya, South Africa, Ghana, Tunisia, and Egypt.
Technavio’s market research analyst predicts the IT outsourcing market in Africa to grow at a CAGR of around 7% during the forecast period, 2016 to 2020. Cost reduction and the need for enhanced efficiency are the primary growth drivers for this market. Cheap labor and growing economy of Africa are the major factors that fuel the outsourcing of IT functions to the region.
The increase in technology adoption such as cloud computing, and analytics, and modernisation of ICT infrastructure is fostering the growth of IT services market in the African nation. Government investment in IT especially among SMEs to improve operational and business efficiencies has also been aiding the IT services sector in growing at a significant rate.
The IT outsourcing market in Africa is highly competitive, and several vendors are offering similar kind of outsourcing services to their clients. They also encourage companies to outsource their IT-related function that do not form their core business process. To differentiate their offerings, they are moving up the value chain by providing services such as data analytics.
The top vendors in the market are:
- Accenture
- CSC
- HP
- IBM
- Capgemini
- Fujitsu
- Infosys
- Cognizant
- HCL
- TCS
- Xerox
Government
The government sector constituted 30% of the market share during 2015 and is opting to outsource IT functions to reduce expenditures of IT department in government offices. Investors from numerous countries are looking for investment opportunities in Africa to explore the emerging and untapped market. The government’s effort to enhance urbanisation and increasing demand from various industry verticals is acting as a catalyst for the IT outsourcing market.
Public sector IT outsourcing contracts are grabbed by many players in the market to provide IT services for government offices. Ease of doing business in Africa will improve owing to government support and IT investments that will provide a suitable business environment.
Banking and finance
The banking and financial services sector are the early adopters of IT outsourcing services in African countries. IT outsourcing services are implemented in the banking services to enhance the bank database management systems. The banking sector struggles with financial turmoil and non-performing assets. Implementation of IT in the banking sector is helping banking organisations to cut their IT cost and increase cash reserves.
Banking services are also facing challenges to manage the enormous amount of customer data, financial data, and other bank-related data. Outsourcing of IT function to the third-party service provider helps to reduce the complexities of database management system and thus is an increasing practice in the BFSI sector. Ghana’s Fidelity Bank, one of the largest banks in Ghana, has partnered with IBM to manage its technology infrastructure and services. This five-year deal will help the bank to deliver advanced customer services and secure its reputation in West Africa.
Similarly, Ingenico, the payment solutions provider, bagged a contract with local value added reseller African Resonance and Standard Bank, a major Pan-African banking group and one of the four major acquiring banks in South Africa. This partnership will help in implementing an innovative outsourcing business model for the group.
Ingenico and African Resonance together will provide an end-to-end secure management of services to Standard Bank. With this contract Standard Bank will optimise the management of their payment services like hardware, software, installation, remote management, device swap, warranty, and repairs.
Telecommunications
The increasing ICT spending in the region for the revamping of communication systems will extensively increase the IT outsourcing activities. The growth in the telecom industry in the African market is in a transitional phase and set to increase IT spending in the upcoming years. The telecom operators in the region are targeting to increase their subscriber base with the adoption of innovative telecom systems and enhanced support services. This will lead to more IT outsourcing contracts to the service providers for the implementation of technologies such as WiMAX at a reasonable price, so as to control the cost.
Healthcare
The healthcare sector in Africa requires technology support for the advanced patient care system and accordingly technology spending in the healthcare sector will increase. IT services such as data center services, healthcare information systems, and supply chain and logistics will attract more investment and outsourcing deals.
Hospitals and super-specialty clinics usually outsource their IT function to services providers to reduce the cost of the in-house IT department. Recently, major hospitals in Africa have adopted advanced healthcare IT systems such as electronic health record and radiology information system.
