South African technology companies can hold their heads up high in the international high-tech design and manufacturing community.
That is the view of Francois Geldenhuys, chairman and chief technical officer of local company, Azisa, which was recently acquired by Flextronics, a leading global electronics manufacturing services (EMS) organisation, in a deal it says is poised to change the local technology landscape.
For the past nine years the company - now Flextronics SA - has been providing high-value design, development and sustaining services to a niche sector of the international telecommunications, networking and related value-added services sectors and the local finance and travel sectors. These software design capabilities have been incorporated into the Flextronics Design arm of the group and will be supplementing Flextronics' global solutions, which are already focused on hardware and industrial design, engineering, test, manufacturing and logistics activities.
Unusual deal proves local high-tech industry among best in world
Geldenhuys comments: "The acquisition is a feather in our cap - it is not often a global organisation invests in South African intellectual capital. The fact that Flextronics SA extends the suite of services that Flextronics offers globally, is proof that South Africa can compete with the best in the world."
Geldenhuys explains that, as Azisa, Flextronics SA generated the majority of its revenue abroad by exploiting the advantages of its location in a remote development context. The company's success was hard fought; "the offshore technology outsourcing industry is currently dominated (80 to 90%) by Indian companies. Other competition derives predominantly from China, Ireland, Israel, Pakistan and Russia."
The advantages of operating from South Africa (lower cost to customers, quality of life for employees, the ability to recruit promising local graduates and the virtual day advantage offered by the time zone) contributed to Flextronics SA's success. While this was recognised locally - Azisa won numerous awards over the past two years - the company always faced the challenge of establishing credibility internationally and sought channel partners to address the problem of market access.
Geldenhuys continues: "We could not have found a better partner than Flextronics. Being part of the group enables us to exploit all the advantages of being in South Africa without having to overcome the associated confidence barriers. It also means we are able to take a product from concept though development and testing to manufacturing and distribution in a one-stop shop approach. For SA companies, it means Flextronics' entire suite of services become available here."
Range of technology services available in SA will increase
Prior to the acquisition, Flextronics SA's technical innovations revolved around solutions for the next generation network, Internet telephony and protocols, broadband access, wireless infrastructure, switches, routers, gateways and protocol interworking, remote access facilities, value-added telecom applications, electronic commerce and mobile e-commerce. Now exciting new opportunities include growth plans that involve diversifying geographically to service technology suppliers in Europe and Asia. Flextronics SA is also already involved in Flextronics' original design and manufacturing (ODM) programme. Company management also expects to be able to take advantage of new opportunities in the local automotive, mining, process control/industrial design and security/military sectors.
Comments senior director, Mark Robson: "We expect the acquisition to enable us to extend our customer base to include both the global Flextronics group and their customers in addition to our existing customers. South African companies have a unique opportunity to deliver maximum value to international customers by providing the best performance vs cost ratios. We can now confidently say that we are becoming a force to be reckoned with within the global technology development industry."
SA high-tech industry will grow
Flextronics' investment in Flextronics SA significantly enhances the company's ability to work on world-class projects with leading-edge technical content. The company believes the collaboration will stimulate the local economy in the medium- to long-term by:
* Creating additional high-level employment opportunities through an increased demand for resources in the engineering and computer science fields.
* Expanding skills by exposing employees to ground-breaking technology, thereby increasing the South African standard.
* Counteracting the brain drain, because ambitious South Africans will not have to leave the country to make globally-recognised contributions.
* Facilitating co-operative projects with local partners and suppliers to provide a spill-over benefit to many other SA companies.
Geldenhuys concludes: "Flextronics SA's future is bright. The challenge facing the industry, though, is twofold. Firstly, we need to improve the image of South Africa as a global technology innovation hub. Individual companies cannot continue to operate in isolation and it is important to coordinate our efforts to promote South Africa as a whole. Secondly, it is vital for us to nurture our engineering talent by making engineering and computer science courses attractive to students and providing them with an exciting and challenging working environment after graduation. We also need to keep improving the standard of the industry as a whole by giving people the opportunity to be involved in innovative projects. We are looking forward to being able to make a significant contribution to this process as part of Flextronics SA."
For more information contact Alice Andersson, Flextronics SA, 011 293 0500, [email protected]
Flextronics facts ...
* Flextronics is a leading electronics manufacturing services (EMS) provider with design, engineering, manufacturing and logistics operations in 29 countries on five continents.
* It is focused on delivering operational services to technology companies.
* Headquartered in Singapore, Flextronics had fiscal year 2002 revenues of $13,1 bn and approximately 95 000 employees.
* Flextronics Design, a business unit of Flextronics, is a global provider of engineering design services that creates innovative, market-leading products.
* Flextronics Design has more than 1500 design engineers worldwide, and delivers complete system-level solutions and partners with customers at any stage of the product development life cycle, from concept to production.
* By integrating design engineering services with a global manufacturing infrastructure, Flextronics can lower product costs and reduce time to market.
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