By OTIATO GUGUYU
Tuesday September 20, 2022
Local companies are struggling to recruit and retain key talent as US tech titans led by Microsoft, Amazon and Google tilt the market in their favour. FILE PHOTO | NMG
Local companies are struggling to recruit and retain key talent as US tech titans led by Microsoft, Amazon and Google tilt the market in their favour with high salaries and attractive employment terms.Smaller companies in the area such as Wasoko, Flocash, Twiga foods, Lori Systems, and Sendy, who had invested in and trained young engineers, have been swiftly outbid.
The three multinationals have increased their presence in East Africa with Kenya as their hub, triggering an aggressive hiring spree that has seen them pay up to Sh1.8 million monthly for principal tech specialists.
The multinationals are also paying around Sh300,000 to junior tech developers, Sh500,000 for mid-level techies and between Sh800,000 and Sh1.3 million for lead and senior roles.
But while the talent war is resulting in higher compensation for Kenya’s techies, it is disrupting the business plans for local firms and smaller foreign technology companies.
Major telcos and banks, long considered the best-paying organisations for techies in Kenya, are also losing their top talent to Big Tech.
“You know, what's happening in this market across all of us. We have some people called Microsoft, Amazon, Google who are just mopping up our developers,” said Patricia Ithau, the chief executive officer of WPP Scangroup.
“We have a programme we recruit from the university two, three months, they come in from college, and you offer them a hundred. Google tells them two hundred, there's nothing you're going to do. They're going to go. And then they go from Google. Microsoft offers them three hundred, they'll move. So until we start creating a lot more talent, it is the way of the world.”
Global tech giants have been increasing investment on the continent in recent years to take advantage of growing economies with rising access rates to the Internet by a youthful population.
They are using Kenya, South Africa and Nigeria as their launch pads for a bigger stake of Africa.
In April, Google announced the opening of its first ever Africa product development centre in Nairobi as it positions itself to serve the growing base of Internet users on the continent.
The US tech giant said it would be hiring engineers, product managers, user experience designers, and researchers to staff the new centre.
The company is investing $1 billion (Sh120 billion) in various projects on the continent over five years, its CEO Sundar Pichai said last October, to help economies accelerate their digital transformation.
Its peer, Microsoft, has also been investing in technology development hubs in Kenya and Nigeria, putting in $100 million (Sh1.2 billion) and hiring hundreds of engineers in both countries.
The local talent will aid in customising its applications for the African market and to develop new ones.
In 2019, the tech heavyweight opened the engineering hub, the Africa Development Centre (ADC) in Nairobi and promised to fill 500 software engineering roles at the facility and another in Lagos by 2023.
In March, Microsoft had grown its full-time employees working at the Nairobi ADC in software engineering, machine learning, data science, market research and other areas to over 450.
“The facility will continue our efforts towards training, equipping and hiring engineering talent in Kenya and Africa,” Jack Ngare, former managing director of the ADC said during the launch.
Microsoft Kenya country boss Phyllis Migwi says it is not just about the money multinationals offer young people an opportunity to make a difference as well as a liberal working environment.
“Microsoft offers a diverse and inclusive environment, as we believe that our continued success depends on the diverse skills, experiences and backgrounds that our employees bring to the company,” she says.
To refill their ranks local companies have upped their recruitment antennae and are setting up training schemes to boost their numbers or partner with independent developers.
Safaricom hired 400 software developers this year as the company seeks capacity to run its highly digitised business, underlining the demand for tech talent even as global digital companies set up shop in Nairobi.
The new hires are 6.4 percent of Safaricom's 6,230 permanent, temporary, and contracted employees at the end of last year, highlighting the aggressive acquisition of tech-savvy workers.
Safaricom CEO Peter Ndegwa said the company’s business also hinges on a network of over 42,000 independent developers.
He said the telco seeks to start tapping developers from learning institutions while influencing the curriculum to have a wider pool of talent for the future.
“We will be announcing soon that we are going to be partnering with other tech companies and universities to influence curriculum, certification of developers, and also internships so that we also develop talent for the industry in the same way lawyers and accountants are developed," Mr Ndegwa said.
As the tech giants hire and seek a larger stake in the continent’s business, a host of African start-ups are racing to harness technology to overcome challenges for local businesses and consumers, further driving demand for talent.
But the start-ups are finding it difficult to retain and hire new staff as the US titans take the best talent out of the market.
Little-known Kenyan firms using technology to reach underserved markets have emerged as the fastest-growing businesses in Africa, according to a new report that ranks Nairobi as the third-largest home for the quickest expanding companies on the continent.
The inaugural FT annual ranking of Africa’s fastest-growing companies shows that 10 of 75 such firms are located in Kenya.
Except for retailer Quick Mart and agricultural inputs distributor East African Business Company Ltd, the Kenyan fastest-expanding firms on the FT list, including two which topped the continent, leverage technology in offering products.
Wasoko, the platform which delivers fast-moving consumer goods to kiosks and shops in Kenya’s fragmented informal markets, was ranked the fastest-growing business on the continent in the FT’s inaugural survey.
The firm, rebranded from Sokowatch in March after raising $125 million (Sh14.37 billion) for first-phase expansion (series B funding ), had the highest compounded annual growth (CAGR) in revenues of 346.2 percent in four years through 2020.
Wasoko — which also offers a line of credit for retailers — grew revenue to about $27.4 million (Sh3.15 billion) in 2020 from $0.3 million (Sh34.5 million) in 2017, raising the number of its employees to 372 from 57 in the review period.
Kenya’s fintech startup Flocash emerged second in Africa after its annual revenue growth averaged 274.70 percent, climbing to $6.4 million (Sh736 million) in 2020 from $0.1 million (Sh11.5 million) four years earlier.
The e-commerce platform, which allows merchants to make payments between Africa and the Middle East, has a staff count of 82 from 20 in 2017.
Lori Systems, which provides real-time information on long-haul transport services (e-logistics solutions), was the third Kenyan company in the top 10 fastest-growing firms on the continent after ranking seventh.
Lori’s revenue climbed to $25 million (Sh2.87 billion) from $2.9 million (Sh333.5 million) in the review period, posting a CAGR of 105.10 percent and raising the staff count to 142 from 20 employees in 2017.