South Africa is building its own ‘silicon valley’ – and companies ranging from Amazon to startups are hiring

 ·13 Jul 2022

International companies, like Amazon and Panasonic, are increasingly choosing to set up headquarters in South Africa as part of their global expansion. With more foreign businesses moving in every year, skilled people have become one of the country’s most in-demand commodities.

Canadian startup CostCertified, which recently opened a local office in Cape Town, said that Cape Town is now one of the world’s fastest-growing regions in terms of foreign investment. Citing data from fDi Intelligence, the group noted that the city has been established as a top destination for international tech companies, with over 40,000 people employed in the sector.

In addition to its infrastructure and cost savings, this highlights the country’s most attractive resource for international businesses – its people.

“South Africa offers a high-calibre, untapped talent pool for international businesses. Between unemployed graduates and people who don’t have any formal qualifications, but have all the relevant soft skills and potential, it’s not difficult to build a strong and successful local team,” said Mike Bignold, founder and chief executive of CostCertified.

The company, which provides cost estimating software for the residential construction industry, acquired offices and began its local hiring process weeks before anyone from the CostCertified team were on the ground in South Africa. From location scouting to conducting Zoom interviews, the entire process was virtual – which posed a number of opportunities and challenges.

“We found that some of our candidates were apprehensive about the speed at which they received offers. CostCertified is a hypergrowth company, and once we decide someone is a good fit, we fast-track the employment process to get them started ASAP. For South Africans who are used to four-week-long hiring processes at huge firms, this can come as a surprise or seem questionable – but eventually, they come around,” he said.

“Our strategy is not to solely focus on experience or education, but rather to get to know our employees in order to fully maximise their strengths and value. This presents an opportunity to accelerate their careers significantly,” says Bignold.

In particular, South Africans are sought-after for sales development and customer success roles. First and second-language English speakers often have neutral accents that make it easier to connect with customers across the world.

Major multinationals like Amazon and Panasonic have identified and leveraged this opportunity since 2004 – but with more businesses moving in every year, companies now have to work harder to differentiate themselves and attract talent.

“Creating an environment where employees genuinely want to spend their time is a simple and effective way to attract talent, promote productivity, and generate positive word-of-mouth reviews. This doesn’t mean bean bags and ping pong tables – it’s about ensuring that each employee feels they are doing purposeful work, learning new skills, and that they share the values of the company,” said Bignold.

South Africa’s ‘silicon valley’

The 2021 report from fDi Intelligence, a data division of the Financial Times group, shows Cape Town is one of the world’s fastest-growing regions for foreign direct investment.

The ranking also awarded South Africa first place in Africa for economic potential, start-up status and business friendliness.

In addition to receiving the largest number of foreign direct investment (FDI) projects in the software and IT services sector, South Africa also recorded the second-highest number of start-ups, after Nigeria.

Cape Town was awarded second place after Cairo for FDI strategy after displaying impressive initiative in creating the necessary infrastructure for a thriving tech ecosystem.

“Extending beyond Cape Town, the Western Cape boasts a robust tech ecosystem,” said Wesgro, the Western Cape’s official tourism, trade and investment promotion agency.

“The Cape Town – Stellenbosch corridor contains 450 tech firms employing more than 40,000 people, making the ecosystem bigger than Nairobi and Lagos combined.”

Other key aspects that make Cape Town the ‘tech capital of Africa’ include:

  • Tech start-ups: At the end of 2020, there were 550 tech companies and over 40,000 people employed in the tech sector, in Cape Town.
  • Investments: In 2020, a total of $88 million (R1.2 billion) disclosed investments were injected into tech start-ups in Cape Town across 46 deals, the highest investments made in South Africa.
  • Venture capital firms: the Western Cape has the highest number of venture capital firms, which makes it easy for startups to access funding.
  • Co-working spaces: The Western Cape has over 30 co-working spaces, the highest in Africa and 715 free WiFi spots in Cape Town alone.
  • Developer talent: Cape Town hosts 38% of the total developers in South Africa, the highest concentration of developers in the country.
  • Coffee culture: Cape Town boasts a deep and diverse coffee culture across 100s of stylish outlets.
  • EdTech Hub of Africa: Cape Town has a high density of digital skills training academies and is the location of choice for EdTech businesses that are building content for entities and educational institutions across the globe.
  • Home to four world-class universities: The University of Cape Town retained its spot as Africa’s top university, with Stellenbosch University ranked the 3rd best University in the 2021 Times Higher Education (THE) World University Rankings. Students from across the globe come to study in Cape Town, with many being attracted into the growing tech ecosystem.
  • Ease of doing business: According to the latest World Bank research report on Doing Business in South Africa, Cape Town ranked the top metropolitan municipality in the country when it comes to the ease of doing business.

Read: New laws coming for cryptocurrency in South Africa

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