SA execs look to emerging mkts for lessons: Neotel

The survey was sponsored by Tata Communications and Neotel and highlighted the growing influence of developing markets, rather than developed markets, in the global economy.

According to the survey South African companies expected to increase their investment in emerging markets, including SA, by over 30% in the next year.

Emerging market survey respondents (those from China, India, SA and the Middle East) were asked which markets they felt offered the most opportunity for rapid growth. China led the pack at 51%, followed by India at 46% and Brazil at 26%. SA was selected by 18% of respondents, ahead of Russia and the United Arab Emirates (both at 11%).

Respondents from SA identified their home market as offering the most growth opportunity to them with 46% of the survey choosing this option, while 24% selected China and 22% chose India.

Furthermore, when asked which of the FTSE Emerging Market Index countries they considered to be most progressive, 42% of respondents from China, India, SA and the Middle East selected China. This compared with the 27% who selected India and just 1% who indicated that they believed Russia to be most progressive. Of those surveyed, 6% believed SA to be most progressive, with 27% of South African respondents selecting this.

A total of 87% of business leaders from both developed and emerging markets (China, India, SA, France, Germany, Hong Kong, Singapore, the Middle East, the USA and the UK) were actively engaged in emerging markets, despite 56% acknowledging that they associated emerging markets with political instability. At the moment, 34% of companies in SA were looking at operating in emerging markets, compared with 61% of Chinese and Indian companies. A total of 55% of Singaporean respondents, 45% of Middle Eastern and 40% of South African businesses had already set up operations in emerging markets, the only markets in the survey to have a higher figure with an established presence than those considering such a move (e.g. India, China).

The most popular choice for market expansion was China with 51% of global respondents stating that their organisation was looking at expanding there; 39% selected India and 33% Brazil as likely target markets, with 16% identifying SA as a market under consideration. The respondents most likely to select SA as an expansion destination came from SA (38%), China (28%) and India (21%).

The main driver for moving to emerging markets was the potential to capitalise on growth opportunities with 63% of business leaders surveyed selecting this as a reason. In line with the focus on growth, competitor activity was also a factor with 44% of the overall survey selecting this as a reason for moving into emerging markets. The survey revealed that on average respondents who were looking into, or were already operating in emerging markets expected to increase investments therein by 36% over the next year.

However, South African companies were most likely of all surveyed countries to look to new markets in order to benefit from cost savings with 35% of South African respondents selecting this as a reason their organisation had discussed moving into emerging markets, and 16% as the main reason for doing so. Almost half or 49% of South African business leaders associated emerging markets with cost effectiveness.

Sunil Joshi, MD and CEO of Neotel, said, "The fact that 16% of the 1,600 business leaders surveyed globally are planning to invest in SA speaks volumes of the growth potential of this market. Reliable communications infrastructure is an enabler of growth in the domestic and global market place. A significant number of South African business leaders are looking to expand into other emerging markets and Neotel with its state-of-the-art IP infrastructure sees itself as an enabler for these businesses."

Vinod Kumar, MD and CEO, Tata Communications, said: "For companies to capitalise on that potential we need to see greater levels of investment in the infrastructure that is essential to support it. That will inevitably require more focus on developing talent and innovative thinking in markets that can have less educational investment in those areas. It is clear that businesses are prioritising communications and digital infrastructure as a critical part of their operations. The ability to manage those communications and to ensure reliability and security requires a level of global, and in particular, emerging market experience."

There were significant challenges ahead of those looking to operate in emerging markets. When asked to select their single most critical challenge for organisations moving to an emerging market respondents were almost evenly split with 18% citing government regulation, 16% established competition, 14% finding skilled staff and 11% communications and digital infrastructure. Respondents from SA indicated that government regulation was their most critical challenge with 25% of those surveyed selecting this response. The lack of a reliable communications infrastructure was a blocking factor for over one-third of those surveyed and was the fourth most selected item in the survey.

Skills were identified as a critical challenge by 37% of all those surveyed, with 44% of emerging market respondents stating that availability of talent was a reason they would call a market progressive. However, the kind of talent valued varied market to market with 60% of South African respondents citing software development skills and communications technology experience as key factors, while 52% of Middle East based respondents focussed on business management and 63% of Chinese business leaders looked for general education levels as an indicator.

Respondents were also asked what one factor they felt was most crucial to successfully running a global organisation. Having reliable communications amongst all branches/territories and a flexible business strategy emerged as the most important with 28% of respondents selecting them. Reliable communications was the most important factor according to business leaders in the USA, Germany and Hong Kong.

Communications infrastructure was the fourth most selected critical challenge for companies looking to move to emerging markets and four in 10 people also stated that a lack of a reliable communications infrastructure would prevent them entering a market. This emphasises the importance of telecommunications in an increasingly connected world and demonstrates that reliable communications continue to be seen as a must-have part of any market that wishes to compete internationally.

As part of the survey, Tata Communications also asked respondents what characteristics they felt most important in a telecommunications supplier. In that respect 54% selected reliability and 34% security, with a third also choosing experience across multiple markets (both emerging and developed) as essential.

Vinod Kumar, concluded: "There is a different approach to developing and maintaining communications infrastructures depending on the individual characteristics of the market in question. In my mind reliability and security are must-haves but where a telecommunications supplier can add real value is in the experience of working in different environments, across multiple geographies and the innovation that a global mindset can bring to bear."