Indian firms rush to bridge digital gap in Kenya
Top-tier Indian firms have stepped up their presence in Kenya in recent months hoping to secure lucrative telecom deals that are set to be finalised within the next six months.
Tech giants such as Mahindra Satyam, Infosys and Tata who hope to capitalise on growing prospects in the sector have all recently increased their local presence as they move to establish regional bases operating out of Nairobi.
On the radar is the expected hefty investment by mobile operator Airtel as it seeks to consolidate its entry into 13 African markets following its buyout of Zain Africa last year.
That aggressive play by one of India’s largest telecom firms has spurred more companies from the sub-continent to make forays into the local telecommunications market, which is expected to grow by 65 per cent over the next four years.
But alongside the more visible investments in the mobile sector where the Indian mobile firms Airtel and Essar operate, ongoing efforts by the government and private firms to digitise their processes has attracted Indian firms operating in other sectors such as software, IT engineering and infrastructure.
Analysts attribute increased investment in the ICT sector to a number of enabling moves undertaken by the country to liberalise the sector.
“Kenya’s new constitution, combined with private investments in infrastructure and a quickly growing telecom sector, shines an optimistic light on the state of Kenya’s economy. Moves by the CCK continue to encourage investments in this sector,” said Majd Hosn, Associate Research Analyst at Pyramid.
Pyramid says that vendors are responding to high demand for their products as more operators, companies and government agencies seek for services and technology to set them apart from their competitors.
Mahindra Satyam recently restructured its operations to enable it to take advantage of the increased growth opportunities in Africa, picking out Kenya, Nigeria and South Africa as key markets where it immediately needed presence.
The company, which mostly supplies Enterprise Resource Planning products, hopes to deliver systems integration and outsourcing solutions to clients in numerous industries regionally.
“Our interest has been steadily rising, and we intend to focus more fully on the East African region to capture some of the demand for IT services. It will be a subtle move, but in five years we should have a more visible presence,” said Manojeet Chowdhury, vice-president, Mahindra Satyam, Middle East and Africa operations.
Its entry into the Kenyan market four years ago has seen it capture a share of key projects for large entities such as Kenya Airways, Airtel and the Central Bank of Kenya.
Now Mahindra Satyam intends to intensify its focus on larger contracts within the region, with an eye on recruiting more businesses to cloud computing – a concept that allows for documents and resources to be shared online.
It also hopes to capitalize on its 2010 coup of winning the contract to supply IT systems for the FIFA World Cup to clinch more sports-related contracts.
In its quest to establish a larger footprint in the region, Mahindra joins Infosys, a software service provider, who recently announced that it would start a long-term play for more business in Kenya.
The company’s CFO V Balakrishnan told Times of India that the company is now looking at a broader play in the continent as they see greater potential demand for IT services there.
Currently Infosy’s offering in Africa is limited to the banking solutions product Finacle, but it now wants to extend offshore IT services.
In 2009, Tata Communications, a leading provider of internet communication services, signed a landmark deal with local ISP AccessKenya to establish a Tier 1 Internet Point-of-Presence (PoP), a project which was intended to ease access to the internet for African firms.
Last month, it signed an agreement with Safaricom that will see the company provide video conferencing solutions to local firms.
“Operators are seeking means to enhance their network, either through infrastructure expansion or more efficient use of the existing one, and vendors that specialize in this will have their hands full keeping up with demand,” said Mr Hosn in Pyramid’s Kenya: Data Services and Infrastructure Investment Top Operator To-Do Lists report.
