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2014

Technology, Education, Training and Infrastructure are key areas which are rapidly developing in emerging Tier II and Tier III cities in

India. For IT and ITeS industries, Talent and Infrastructure are key factors that help reduce operational costs and can provide the

competitive edge at the same time. With Tier I cities inching towards a saturation point and the ever spiraling costs of infrastructure, cost of

talent, cost of attrition, high costs of living, and overall Opex, Tier II and Tier III cities offer an affordable and competitive alternative.

Nairobi

Global Emerging Cities and Technology Talent outlook - 2014/15

01

Proactive local governments of Tier II cities

Local governments of Tier II cities have taken several proactive steps to fuel business activity in their respective regions. For instance, a few local governments have set up dedicated Software parks and SEZs for IT services industry. Few local governments are also offering free land to companies.

Abundant and Economical Talent availability in Tier II Cities

Some of the Tier II cities have an abundant supply of skilled workforce due to the presence of prominent local educational institutions. In addition, average salaries in Tier II cities are 18% to 22% less in compari-son with salaries in Tier I cities.

Scope of this Report: This report explores the quality of talent, demand for talent, supply of talent (lateral & fresher) and hiring best practices in Nairobi.

Executive Summary

Background to the Report

IT services companies are exploring new locations for expansion and growth. Organizations are trying to leverage their expansion plans for reducing operational costs and improving their bottom line. Talent has always been the one siginificant factor that is cost-intensive and the point of competitive differentiation for IT services industry. This has forced hiring managers to be on a relentless pursuit of quality talent. As the conventional locations for talent i.e. the metros and Tier I cities get saturated, the hiring managers have started looking beyond metros and Tier I locations. Such trends have enabled the rise of the “Tier II” cities. Owing to such importance of Emerging Cities, Reseach Fox decided to closely follow the talent trends for 100 such cities across the globe.

The following section delves into factors driving the importance and growth of emerging cities across the Globe.

Enterprises seeking growth beyond Metros and Tier I cities

The last few years have seen global economies becoming increasingly volatile. Global enterprises operat-ing from metropolitan and Tier I cities have struggled to keep up with this instability. At the same time, India is witnessing tremendous growth opportunities from Tier II cities. These cities have relatively cheap infrastructure, progressive local governments, a number of educational institutions and an abundant supply of skilled workforce. Shared Services and BPO are the two industries which have started to show keen interest in Tier II cities.

Tableof Contents

ForewordExecutive SummaryAdvisory Team/Key People

1. IntroductionResearch OverviewCriteria for Selecting Emerging CitiesResearch Objectives & ScopeKey Takeaways

2. Research MethodologyResearch ModelingInterviews ConductedAnalysis and Triangulation

3. City - At a GlanceDemographic OverviewGovernment & Industry HighlightsMarket Highlights

4. IT Talent OverviewICT EvolutionWorkforce AnalysisIT EcosystemIT Talent Pool Analysis

5. Talent Ecosystem - IndustryInstalled Talent Pool AnalysisCompany AnalysisC&B AnalysisTalent MobilityDiversity Analysis

6. Industry Connect & Support EcosystemIT ParksSEZIndustrial Collaboration

7. Talent Ecosystem -EducationUpcoming Talent Pool AnalysisColleges AnalysisTalent Pool GrowthTraining EcosystemUniversity EcosystemPlacement Ecosystem

02

8. Macro & Micro ParametersQuality of LifeHealthcare EcosystemCultural compatibility & RecreationGovernment & PoliticsBusiness Continuity and RisksConnectivityInvestment Policies

Cost of living indexUtility Cost analysisInfrastructure Analysis

9. Cost Analysis

10. Location Sphere (Rfox Decision Matrix)

1.3 Research Objectives & Scope

Objective of the Research: The objective of this research is to conduct in-depth talent pool and location analysis of Nairobi across identified technology functions which can provide a current view of this emerging location and opportunities for growth.

Scope of the Research:The study explores the parameters given below:

Elements detailed in the Location Study of emerging cities and Talent Outlook in Nairobi:Talent:

Talent Pool AnalysisSkill (Freshers Talent)

Technology (Lateral Talent)

Talent QualityCompensation Analysis

Training EcosystemIndustry/Association tie-ups

Existing Talent Demand-Supply GapRecruitment DriversTop Hiring Strategy & ChallengesLocation Preferences (Emerging Cities)

Infrastructure:Facilities and Infrastructure Availability Economic GrowthAccessibility and Connectivity

Quality of life/Standard of LifeCompetitive Scenario

Government Support

Ease of doing business

Cost:Infrastructure Facilities (IT Parks/SEZ, L&B)

Tax Structure (Policy & Benefits)

Transportations

Utilities

Commercial & Real Estate Cost

The scope of the study encompasses the following Industries, Service Lines/Technol-ogy with respect to Talent, Infrastructure & Cost:

03

Industry

IT/Technology

Education

Training

Service Lines/Technology

R&D (Product Development)

IMS

PES

Enterprise Software (ERP)

ADM

BI

CRM

IT Education & Training

BPO (Voice and Non Voice)

ITServices

Other

1.4 Key Takeaways

Explores opportunities for growth, talent access and/or cost efficiencies.

Gives a better understanding of the technical talent available and the entire education system in Nairo-bi, which will help the users to define skills and capacity to fulfil their requirements and the cost factor involved.

Gives clarity on the demand and supply of fresh and lateral talent across the city and how it could speed the hiring process and optimize training needs with appropriate alliances with training partners and colleges.

Helps in better understanding about the technical training ecosystem, which can help leaders to initiate incubation centers, industrial training centers, associations and tie-ups in Nairobi.

Benchmarks peers and competitors and helps adopting best practices to create efficient business processes within the companies.

Helps HR leaders formulate retention strategy and curb talent mobility.

Provides insights into talent infrastructure and capabilities available in Nairobi which can be up skilled to provide high end services

Provides better understanding on transportation and utilities, which helps identify the best opportuni-ties present in this geography for expansion.

Clarifies issues on taxation, government policies and tax benefits in Nairobi.

04

Research Methodology

To benchmark Nairobi, we conducted a detailed location analysis and perception survey. The survey focused on understanding Freshers talent ecosystem, Lateral talent ecosystem and Training Institutions’ ecosystem. We conducted an in-depth analysis of the talent parameters which are currently available in Nairobi taking into consideration priorities, growth prospects and needs. Using proprietary talent pool assessment and analysis framework, we identified the talent suitable for the IT/ITeS industry with particu-lar skills, overall maturity and prior experience in similar industries.

Research Modeling

Type of Research: Quantitative/Qualitative Research

Sampling Method: Purposive Sampling

Sample Size: 1000 Industry Participants

Target Geographies: Global Emerging Cities (Tier II & III cities)

Target Group: Placement Coordinators, HR Heads and Training Institute Stake Holders/Owner

Duration: Nov 2013 – Feb 2014

Interviews ConductedA total of 200 surveys was completed as follows

* Face to face in-depth interview

Respondent % ofInterviews

Information Areas

Business Acquisition Leaders* 10%

30%

30%

20%

5%

5%

Placement Coordinators

HR Heads/Leaders

Training Institute Stakeholders/Owner

Management Consulting/Advisory Companies*

SMBs of different Technology Areas

TalentAcquisition

LocationOverview

Recruitment& Placement

TrainingEcosystem

Analysis and TriangulationData collected through these approaches was analyzed and compared to identify trends, divergences and patterns. Findings and issues from different methodological approaches were triangulated and further analyzed to corroborate the evidence.

The Triangulation Methodology usedDocumentation review and analysis

Interviews (Telephonic + Face to Face)

Placement co-ordinator interviews and Focus group

02

* The margin of errors for a sample of 200 surveys is 5% with 95% confidence level.

05

06

1.1 Demographics Overview

1.2 Economy

1.3 ICT Evolution 1.4 IT Ecosystem

1.5 Company Analysis

1.6 College Analysis

1.7 IT Parks

1.8 SEZ

1.9 Industrial Collaboration

1.10 Sector wise contribution of GDP (%)

1.11 Industry Presence

List of Tables

07

1.1 Workforce Analysis

1.2 Installed Talent Pool

1.3 Distribution of IT/Technology companies by type

1.4 Distribution of IT/Technology companies by Business Area

1.5 C&B Analysis

1.6 Contract Staffing Analysis

1.7 Industry - Talent Mobility

1.8 Diversity Analysis

1.9 Upcoming Talent Pool Analysis

1.10 Distribution of indian College

1.11 Distribution of IT Technology companies by Business Area

1.12 Talent Pool Growths & Trends

1.13 Course wise Training institute

1.14 Analysis of Training Institutes by type

1.15 University Ecosystem

1.16 College wise Placement Analysis

1.17 Average Placement by type Colleges

1.18 Quality of Life

1.19 Healthcare Ecosystem

1.20 Cultural compatibility

1.21 Government & Politics

1.22 Connectivity

1.23 Cost of Living Index

1.24 Utility Cost Analysis

1.25 Infrastructure Cost

List of Charts

About ResearchFox

ResearchFox is an International market research Compa-ny with focus on delivering high quality research services to business professionals, organizations and individuals through knowledge driven research methodology.

We provide first-hand data services & reports on various industries, technologies, market parameters and key competitors in the industry thereby giving rational forecast on market trends to help clients identify prospective growth areas and gain competitive edge.

Established as SBU of Han Digital group in 2009, ResearchFox was officially incorporated in 2012. We provide niche market research services which goes beyond client - vendor transactions/ interactions by not only paving way for strong relationships but also creating a healthy ecosystem for actionable decision making

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