Demand for skills drives the market
Business data services have increasingly emerged as business-critical in South Africa and majority of business data services are complex, resource-intensive and expensive to operate in-house, according to new analysis from Frost & Sullivan.
The firm said that operators are opting for specialist expertise by outsourcing the services in sectors such as financial services, retail and hospitality due to the stringent regulatory requirements in sectors such as financial services, retail and hospitality.
According to new analysis from Frost & Sullivan, South African Client Requirements for Outsourced Business Data Services, the market earned revenues of $158m in 2008, and estimates this to reach $327m in 2015. It emphasises that improved efficiencies and access to skills are the key drivers, though cost cutting has historically been the main reason for outsourcing, in the case of business data services.
The research firm said that most of the data services in South Africa have reached the maturity stage or are nearing maturity in terms of adoption and usage. These include internet services, data storage services and disaster recovery/business continuity services.
The cost savings from outsourcing services have not been as forthcoming as the market initially expected. In addition, customer service has been below the customers’ expectations, resulting in some providers in-sourcing their data services operations.
The firm advises service providers to have a greater focus on providing the true total cost of ownership benefits and reduce their effort on promoting outsourcing as a means to cost savings.
Spiwe Chireka, research analyst at Frost & Sullivan, said: The critical shortage of relevant skills for business data services, the high cost of retaining dedicated in-house staff, and rising legislative and regulatory demands are encouraging companies to outsource their data services processes and systems.
“While strong inroads have been made by vendors, there still remains room for improvement to provide seamless integration and interoperability between the new outsourced and existing in-house systems. Customer service strategies that enhance value for the customer – access to a wide support network, deep and wide technical solutions, and applications that facilitate knowledge sharing – will provide a strong competitive differentiator for operators in the future.