Budget 2015 Sector Scan: ICT set to grow steadily amid govt focus on tech adoption
While the island’s ICT sector is grappling with challenges such as ensuring cyber security even as information flows increase, it is also getting a boost from the presence of large global players such as Accenture, Ceridian, TNT, Microsoft, Huawei, Orange Business Services, Pactera, Besedo and Infosys. (Image: mtci.govmu.org)
After the sector scan of the financial services industry (http://bit.ly/1A406pW) and the tourism sector (http://bit.ly/1aXomnP) last week, AfricaMoney is starting this week with the third largest economic pillar, the ICT sector. Showcasing the island economy’s ambition to enter the league of advanced service economies such as fellow island economy Singapore, the ICT sector is currently the third largest pillar of the Mauritian economy. While the island’s ICT sector is grappling with challenges such as ensuring cyber security even as information flows increase, it is also getting a boost from the presence of large global players such as Accenture, Ceridian, TNT, Microsoft, Huawei, Orange Business Services, Pactera, Besedo and Infosys.
ICT Sector Overview:
With a contribution to Mauritius’ Gross Domestic Product (GDP) at 6.8%, the Information, Communication and Technology (ICT) sector, is poised to become the 3rd economic pillar of the island.
However in the ICT space on a global scale, Mauritius still needs to climb the rungs of the ladder. The island ecology failed to make it among the top in the International Telecommunication Unit’s latest “Measuring the Information Society” report. The country ramped up to the 70th position only, though it snagged the top spot on the African continent.
Recently, at an event gathering in January 2015, Mauritius Minister of Technology, Communication and Innovation, Pravind Jugnauth, explained that “2020 will be a testimonial to how innovative the country is, particularly in terms of technology adoption.” He also stressed on the strategy to position Mauritius as a platform for the delivery of ICT-related business services to Africa.
Finally, it may be noted that foreign direct investments have played a key role in ICT development in the island economy so far, with a healthy mix of large multinationals and local players operating in Mauritius, providing employment to over 19,000 persons in the industry. Global players such as Accenture, Ceridian, TNT, Microsoft, Huawei, Orange Business Services, Pactera, Besedo and Infosys amongst others have established their operations in Mauritius.
ICT industry’s contribution to the Mauritian economy:
As a dynamic sector, the ICT has been able to diversify and set itself as a potential sector for further economic development. The ICT sector is currently the third pillar of the economy with a contribution to GDP presently standing at 6.4% and according to forecasts at end-2014, it can reach up to 7%, at the end of 2015. Moreover, employment stands at 19,242 and exports of Services MUR 5.536 Bn/USD 185 M. The sector churned out Rs 20,487 million in 2013 from Rs 19,226 million in 2012, up 6%.
Since 2010, several measures have been implemented such as democratising access to the internet, setting up of computer clubs on a regional basis and the WIFI Mauritius Programme as examples of this democratisation process.
As many as 264 computer clubs are operational in Mauritius and free WIFI zones have been set up around the island in a bid to bridge the digital divide and to make internet a basic citizen’s right. Mauritius is also now one of the best-connected countries with 54.1% internet penetration in the region, compared to the African continent’s rate standing at 13%.
Apart from the new high end BPO verticals identified, new segments such as cloud computing and online media will be explored. The contribution of the IT/BPO sector to the Mauritian economy is expected to grow to some 8% by 2015 with direct employment in the sector amounting to 25,000.
The sector has developed distinctive strengths in Telecoms, BFSI, IT Application Development as well as Maintenance support. Business opportunities exist in the following segments:
1) BPO Voice – Call Centres
2) BPO Non-Voice – Back Office, Payroll, Finance & accounting outsourcing, Legal Process Outsourcing
3) Information Technology Outsourcing – software development, Mobile apps development, Web development, E-commerce, Multimedia
4) IT Services – Data Centres, Disaster Recovery, Training, Consultancy
6) ICT Trade – retail and wholesale
The country offers the following key attributes for ICT and BPO activities:
1) Proven test bed for new technologies
2) Pool of multilingual, educated and adaptable IT professionals
3) Excellent collaborative business environment
4) Competitive cost to quality proposition
5) Reliable and redundant international connectivity with two international submarine networks
6) Innovative incentives offered by the Government
Besides serving as a primary bilingual location for customer-centric services and a compelling alternative for higher value works, Mauritius is also being increasingly leveraged as the ideal platform for the delivery of business services for Africa.
Key Challenges facing the ICT Sector:
In view of spurring growth in the Mauritian ICT- BPO industry, Government will concentrate efforts on developing new value added and high-end activities thus spearheading innovation.
Information and communication technology will inevitably emerge as a major component of the economy in order to sustain innovation. Mauritius has created an enabling ecosystem for ICT-BPO companies to develop. This sector has democratised access to information and has drastically changed the way one carries out business, communicate, study, and spend leisure time.
However, despite emerging progress, this sector has some relevant challenges to face in upcoming years, such as:
One of the measures of the 2014 budget focused on the deployment of fibre network in 50,000 households. However, with more than 3 million households in all. Mauritius still has a long way to go in providing fibre network coverage to even a majority of its population.
Speed of connectivity
The island economy suffers from erratic and slow connectivity, failing to make it even to the top 50 globally in the NetIndex 2015 rankings, with an average speed of 19.91 megabits pulling it down to 52nd place globally.
Greater support needed for SMEs
Budget 2014 also acknowledged the ICT challenges faced by SMEs. The government at that time, announced the provision of free basic websites to businesses which fall into that category. However question on whether the action is enough is to be debated. To provide a reference point, elsewhere in Singapore, the government has allocated a whopping S$ 500 million to help SMEs in equipping themselves with emerging and productivity-oriented technologies.
Low workforce impact
ICT contribution to GDP has edged up over the years but to a single digit. According to the last census which has been carried, ICT employs over 19,000 professionals in the island but like pointed out by various institutions, the country lacks sufficient talent to take the sector to new heights.
Potential areas of focus for the development of Mauritius ICT Sector:
The industry registered an increase of 5.3% in terms of employment. While the BPO segment maintained its position as the generator of employment within the industry, it is noteworthy that a 12.8% increase has been recorded in the ITO and IT services segment, representing a move towards higher-knowledge based services. Thus, Mauritius should be able to carve this sector as a niche for employment development and skills development.
Pervasive internet connectivity:
The Ministry of ICT is already working with service providers in Mauritius to connect at least 50,000 new households across the country to the digital economy before the end of this year. In the same breath, WiFI structures on 300 sites comprising schools and colleges, community centres, shopping malls, campuses and libraries and airport will be installed. Moreover, Mauritians subscribers aspires and expects higher connectivity for rapid connectivity at an affordable price.
Fast-tracking internet connectivity:
In light of the low speed of connectivity, Mauritius’ Minister of Technology, Communication and Innovation has announced, “We will have to determine how and when we can upgrade the norm to a higher speed threshold, say 30 megabits, and to eventually start deploying 100 megabits by 2020, in line with targets set in some countries of Europe and South East Asia.”
Meeting skill requirements:
To explain the low workforce impact, despite being the third pillar of the economy, many experts in the island economy’s ICT sector have spoken about the mismatch of skills. In this context, it is worth recalling that the HSC Pro ICT will be officially launched next year and that eight additional scholarships for ICT has been added to the basket.
Combating Computer Misuse and Cybercrime:
As an emerging technological sector, the authority must prepare and be on guard to issues related to the ICT sector. More strict policies and laws should be brought forward to fight Cybercrime and potential hacking cases.