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How South African SMEs Tech Talent Gap is Rising

Africa is experiencing the transformative impact as a result of technology. The continent’s technology space is fast growing with over 400 tech hubs that range from software engineering to mobile money to blockchain technology. Necessity is the mother of innovation, and this old adage is true to Africa’s growth in tech talent.

Determining talent pools that are broad and deep enough to meet the demands of digital transformation and allow enterprises to scale is even tougher, especially in developing markets. In Sub-Saharan Africa, there have been a significant gap in supply and demand across all skill levels in all regions, with a lower availability of skills than in other markets and significant gaps in African supply of intermediate and advanced skills, according to a study by the International Finance Corporation (IFC).

South Africa’s skills shortage is affecting all businesses in the country from startups to big corporations as they struggle to find the necessary tech skills needed to expand. With larger companies, the solution often lies in upskilling employees internally. Withal, this is resource-heavy and runs the risk of having those employees poached by competitors.

The country’s is looking to remedy that with an approach that is tailored for digital transformation – a foundational change in how companies use technology, workers and business processes to improve performance and services.
According to research from the global small business platform Xero, two-thirds (67%) of South African small businesses struggle to source the right tech talent. Despite struggling to hire, only 14% planned to upskill their existing team members to help close tech skills gaps.

Most small businesses in South Africa have adopted technology they now rely on, with 97% investing in new technologies in 2019. Adoption of cloud accounting leapt from 13% in 2017 to 61% in 2020, indicating that more than half of small businesses can now manage their finances remotely. However, it is clear that many small businesses don’t have the right skills to support the shift.

Prior to the lockdown regulations, 61% of small companies planned to allocate a portion of their budget to tech training. Nevertheless, as many SMEs had to make difficult staffing decisions during the lockdown, much of this money will have been redirected.

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Colin Timmis, Country Manager at Xero South Africa and professional accountant, said: “It’s great to see small businesses embracing digital tools, but investing in technology is only the first step. Many small businesses don’t yet have the skills to match. We need a greater focus from government and technology firms on closing this gap, and helping small businesses develop the right skills to build back faster and stronger from this crisis.”

“If you are struggling to hire external talent, focus on upskilling tech champions in your current teams. Even if your budget is modest, look at what skills you currently have in your organisation that can be built on, make use of free online training and ask for help. For example, your accountant will be able to advise on digitising finances and talk to other business owners who’ve implemented new tech recently.”

Colin Timmis

When asked which skills gaps existed in their team, the biggest gaps that respondents reported were in cloud computing (39%), programming and app development (33%), digital product management (12%), digital project management (10%), and digital design (9%). To try and close the gap, a little more than half (55%) said that they had invested in improving cloud and tech skills over the last year.

Sasha Sanders, Founder of Conscious Company, which assists organisations with culture, communication and storytelling, said “The concept of a learning or growth mindset – those who want to learn new things are open to more information and enthusiastic about expanding their skills – as opposed to a fixed mindset, is something more and more organisations are talking about. We know that things are changing and will continue to change. We’ve heard that the jobs today’s kids will have in a decade or two don’t exist right now.”

“So, training and upskilling people – or enabling them to gain broader and deeper expertise – is essential. It’s also critical to retaining people. Employees, especially younger ones, actively seek employers who put a focus on learning and development, so it will be key for attracting new talent too.”

Sasha Sanders

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“The research shows quite clearly that all businesses are becoming, to a greater or lesser extent, technology-driven. The cloud is now at the heart of almost every business, which explains why cloud computing skills represent the single biggest skills gap across all SMEs. We’ve already seen more than half of SMEs investing in cloud and tech skills. With the digital revolution that occurred as a result of Covid-19 and remote working, this trend will only accelerate,” Arthur Goldstuck, technology analyst and founder of World Wide Worx added.

The main challenges is the difficulty SMEs founders have in attracting design and engineering talent to bring their vision to life. SMEs should offer on-the-job training, worker’s. Encouraging free, community-based learning and business should focus on company values. In the same way, government initiatives, vendor-sponsored training programmes all are needed to train workers for rapidly changing demands of tech jobs in South Africa.

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