Gauteng welcomes CSC investment plans

July 29, 2011 7:39 am 0 comments

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The Gauteng Economic Development Agency (GEDA) says it “is thrilled” by news that IT company, Computer Sciences Corporation (CSC) will invest in the province.

The Global IT outsourcing company, recently announced plans to quadruple its staff complement in South Africa in the next 18 months and generate between 10% and 15% of its revenue in Europe, the Middle East and Africa from the local office within the next three to five years.

The company also revealed it is planning to mount its expansion plans from Gauteng, and in the process, create more than 1 500 jobs for the local I industry with a special focus on unemployed graduates.

The CSC will raise its profile in the local IT outsourcing market substantially in the months ahead as it seeks to win market share from both local and multinational IT outsourcers operating here.

CSC, which has about 350 employees in SA, wants to expand this number to between 1 200 and 1 500 to support its growth plans. It has already begun hiring, and is working with the Gauteng Economic Development Agency to help it identify and recruit IT graduates.

“We are very much excited to be working with CSC as their work fits into the provincial plans of making Gauteng a smart province and a hub of the country’s Information and Technology industry growth prospects,” added GEDA’s project manager responsible for Business Process Outsourcing and ICT, Linda Ranieri.

GEDA has over the years facilitated over R15 billion worth of foreign direct investments into the Gauteng economy with more than 40% of this coming from Business Process Outsourcing (BPO) and ICT sectors.

“This is our next “gold” and we are doing everything in our power working with industry bodies to harness and nature this potential,” concluded Ranieri.

President for global applications at the CSC, Vivek Chopra recently announced that the company is on a hiring spree and intends taking on a large number of university and technikon graduates to support a rapid expansion of its presence in the country.

Strategic acquisitions of local IT outsourcing companies may also be on the cards, though Chopra says no active discussions are taking place at the moment.

“We are very open to anything that makes strategic sense, but we won’t acquire just to get revenues.”

The decision to focus on SA and in turn, sub-Saharan Africa is part of a global CSC growth plan to expand its presence on the continent and in Latin America.

CSC, which first invested in SA in the late 1990s on the back of a big contract win from Old Mutual, is targeting the financial services, mining, telecommunications and transportation sectors and says it is close to signing a number of significant new deals.

The investment comes on the back of the conclusion of an empowerment deal that has seen Amabubesi Capital backed by Vodacom chairman, Peter Moyo and Sango Ntsaluba, taking a 30% equity stake in CSC’s SA subsidiary.

Peter Drube, MD of CSC in SA, says the Amabubesi deal has changed his company’s empowerment credentials and this bode well for future business, noting their recent loss in the bid for a leading financial service provider IT deal.

“The deal has clearly opened the market significantly for us,” Drube says.

He adds that the CSC regards the financial services sector, especially banking, as perhaps its key growth area in SA. In this sector, companies have huge investments in legacy systems, some of them 30 or 40 years old and being maintained by an ageing workforce.

CSC believes there is a big opportunity to help banks move to more modern systems, allowing them to develop unique products that can be rolled out more quickly to the market.

“As we start building the brand, and getting people and processes in place, suddenly we’re finding customers are becoming aware and excited that CSC is coming to this market in a big way,” Chopra explained.

As part of the plan, CSC intends to establish a delivery centre in SA and seed the local market with skills from its international operations. Acquisitions are also possible.

“We have the money on the balance sheet to do that. We need to make up for lost time, for some of the foundational things we should have done in the past and didn’t,” said Chopra.

While reluctant to peg a figure on how much the investment will cost CSC, Chopra notes the objective is to grow the company’s market share from the low single digits to contributing as much as 15% of its total revenue in Europe, the Middle East and Africa within three to five years.

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