Kenyan firms hit as Microsoft and Google’s talent war boosts wages


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Kenyan companies hit as Microsoft and Google talent war raises wages

Local businesses are struggling to recruit and retain key talent as US tech titans led by Microsoft, Amazon and Google tilt the market in their favor. PHOTO FILE | the

Local businesses are struggling to recruit and retain key talent as US tech titans led by Microsoft, Amazon and Google tilt the market in their favor with high salaries and attractive employment terms.

The three multinationals have increased their presence in East Africa with Kenya as their hub, sparking an aggressive hiring spree that has seen them pay up to 1.8 million shillings a month for leading tech specialists .

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Multinationals also pay around 300,000 shillings for junior technology developers, 500,000 shillings for mid-level technicians, and between 800,000 and 1.3 million shillings for management and management positions.

Small businesses in the region such as Wasoko, Flocash, Twiga foods, Lori Systems and Sendy, which had invested in and trained young engineers, quickly outbid.

But while the talent war translates into higher pay for Kenyan techies, it is disrupting the business plans of local companies and smaller foreign tech companies.

Big telecom companies and banks, long considered the highest paying organizations for technicians in Kenya, are also losing their top talent to Big Tech.

“You know, what’s going on in this market for all of us. We have people called Microsoft, Amazon, Google who just scrub our developers,” said Patricia Ithau, chief executive of WPP Scangroup.

“We have a program that we recruit at the university two, three months, they come from college, and you offer them a hundred. Google tells them two cents, there’s nothing you’re going to do. They are going to leave. And then they go from Google. Microsoft offers them three hundred, they will move. So until we start creating a lot more talent, that’s the way of the world. »

Global tech giants have increased their investments in the continent in recent years to take advantage of growing economies with rising internet access rates by a young population.

They are using Kenya, South Africa and Nigeria as launch pads for greater participation in Africa.

In April, Google announced the opening of its first-ever Africa product development center in Nairobi, as it positions itself to serve the continent’s growing internet user base.

The US tech giant said it would hire engineers, product managers, user experience designers and researchers to staff the new center.

The company is investing $1 billion (120 billion shillings) in various projects on the continent over five years, its CEO Sundar Pichai said last October, to help economies accelerate their digital transformation.

Its counterpart, Microsoft, has also invested in technology development centers in Kenya and Nigeria, investing $100 million (1.2 billion shillings) and hiring hundreds of engineers in the two countries.

Local talent will help customize their apps for the African market and develop new ones.

In 2019, the tech heavyweight opened the engineering hub, the Africa Development Center (ADC) in Nairobi and pledged to fill 500 software engineering positions at the facility and another in Lagos by 2023 .

By March, Microsoft had increased its full-time employees working at ADC Nairobi in software engineering, machine learning, data science, market research and other areas to more than 450.

“The facility will continue our efforts to train, equip and hire engineering talent in Kenya and Africa,” CDA Managing Director Jack Ngare said recently.

To fill their ranks, local companies have increased their recruiting branches and are setting up training programs to increase their numbers or partner with independent developers.

Safaricom has hired 400 software developers this year as the company seeks to manage its highly digitized business, underscoring the demand for tech talent even as global digital companies move to Nairobi.

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New hires represent 6.4% of Safaricom’s 6,230 permanent, temporary and contract employees at the end of last year, underscoring the aggressive acquisition of tech-savvy workers.

Safaricom CEO Peter Ndegwa said the company’s business also relies on a network of more than 42,000 independent developers.

He said the telecommunications company is looking to start bringing in developers from educational institutions while influencing the curriculum to have a better talent pool for the future.

“We will soon announce that we will partner with other technology companies and universities to influence curriculum, developer certification and internships so that we also develop talent for the industry in the same way as lawyers. and accountants are developed,” Mr. Ndegwa said.

As tech giants hire and seek to take a bigger 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 boosting the demand for talent.

But start-ups are struggling to retain and hire new employees as America’s titans squeeze top talent out of the market.

Little-known Kenyan companies using technology to reach underserved markets have become the fastest growing businesses in Africa, according to a new report which ranks Nairobi as the third fastest growing business on the continent.

The FT’s first annual ranking of Africa’s fastest growing companies shows that 10 of those 75 companies are located in Kenya.

With the exception of retailer Quick Mart and agri-input distributor East African Business Company Ltd, the fastest growing Kenyan companies on the FT list, including two that lead the continent, are leveraging technology to offer products.

Wasoko, the platform that supplies fast-moving consumer goods to kiosks and shops in Kenya’s fragmented informal markets, has been ranked as the continent’s fastest growing business in the FT’s inaugural survey.

The company, rebranded as Sokowatch in March after raising $125 million (14.37 billion shillings) for a first-stage expansion (Series B funding), posted the highest compound annual growth (CAGR) in revenue of 346.2% in four years to 2020.

Wasoko – which also offers a line of credit to retailers – increased its turnover to around $27.4 million (3.15 billion shillings) in 2020 from $0.3 million (34.5 million shillings) in 2017, increasing the number of its employees from 57 to 372 during the period under review.

Kenyan fintech start-up Flocash came second in Africa after annual revenue growth of 274.70% on average from $0.1 million (11.5 million shillings) four years earlier to 6.4 million shillings (736 million shillings) in 2020.

The e-commerce platform, which allows merchants to make payments between Africa and the Middle East, has 82 employees compared to 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 companies on the continent after ranking seventh.

Lori’s revenue increased to $25 million (2.87 billion shillings) from $2.9 million (333.5 million shillings) in the reporting period, posting a CAGR of 105, 10% and increasing the number of employees from 20 employees to 142 in 2017.

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