Wanted – many IT techies

“There is a massive shortage of IT skills and we are looking for solutions to help our client base,” says Mark Jurgens, Paracon’s CEO. Jurgens says professionals who specialise in Cobalt and SAP “are highly sought-after”, and that there are severe shortages of people with project management skills.

“The shortage is a legacy of the market dip in 2001/2. The first thing to get cut in cost-saving times is the training budget and as a result, fewer people were trained and mentored. There are more people coming through the ranks, but not enough to address the shortages. It’s a big problem.”

Paracon, which is one of the biggest suppliers of IT resources in the country, counts all the banks, insurance firms and manufacturers among its clients.

Nihilent was set up by South Africa’s largest IT company, Dimension Data, and it has a 34,9% stake in the company. Didata is also the largest shareholder in Paracon, with a 27% stake. “Between Didata and Paracon, we’ll own 69% of Nihilent,” says Jurgens. Paracon has not announced how much it will be paying for Nihilent. However, Jurgens says it will be paid for in cash; the company has R116m on the balance sheet. “It will be announced once approvals from the Reserve Bank are received,” adds Jurgens.

Nihilent already operates in South Africa, and its client base includes the SA Revenue Services and Absa. Jurgens says the acquisition “will give clients the opportunity to take projects offshore”, and will help alleviate the shortage.

Overall, Paracon’s revenue increased by 18% year-on-year to R304m, while earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 55% to R25,8m. The Ebitda margin improved by 1,5% percentage points to 8,5%. Headline earnings per share were 45% up to 5,5c a share.

For the year to end-September, cash-generative Paracon paid 70% of its headline profits to shareholders in dividends. Jurgens says the company looks set to do the same this year, unless it finds businesses it could buy.

Jurgens says Paracon will not deviate from its core business of recruitment, network and resourcing by looking to expand in the training space.

Paracon’s resourcing division – which made up around 80% of revenue and earnings – benefited from the buoyant demand for specialist IT resource, particularly in the financial, insurance and ICT sectors”, said the company in a statement.