Small IT start ups

Posted On Friday, 22 March 2002 03:01 Published by
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CAPE TOWN More than twothirds of the information and communication technology companies based in the Western Cape are small start-ups with turnover of less than R10m a year and fewer than 15 employees.
CAPE TOWN More than twothirds of the information and communication technology companies based in the Western Cape are small start-ups with turnover of less than R10m a year and fewer than 15 employees.

This is one of the findings of a 'sector scan' carried out by the Cape Information Technology Initiative (Citi) last year, with the support of the provincial government's knowledge economy and e-government branch.

The generally small size of the IT companies operating in the province only 17 of more than 120 have turnovers of more than R50m a year emerges as a key strength of the sector. According to the respondents, the 'dynamism, creativity and innovative nature of local firms' is their most important competitive advantage, followed by a relatively low cost base.

However, the high number of start-ups might also explain issues such as a lack of professionalism, shoddy service and weak delivery capacity.

The most important weakness was perceived to be the Western Cape's distance from major markets, and the lack of a substantial local market.

Other strengths included the favourable exchange rate for exporters and the 'tightness and coherence of local networks', though a few respondents also considered the latter to be a weakness, particularly when it came to black economic empowerment.

Several participants said the 'brain drain' to Gauteng and overseas remained a problem.

Key challenges included the need to find new markets , expanding exports and managing funding and costs, particularly in the wake of the rand's depreciation

Publisher: Business Day
Source: Business Editor

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