The disruption caused by COVID-19 has created a once-in-a-generation opportunity for Aotearoa New Zealand’s digital and software services sector, with many in the sector buoyant about the future and reporting record growth.
Bruce Jarvis, Group Manager of Digital at Callaghan Innovation, New Zealand’s innovation agency, says: “We went into COVID-19 with a strong, innovative digital sector competing well on the world stage, but the pandemic presented major challenges - especially in funding terms. On the flipside, COVID-19 supercharged global demand for digital services and many of our most innovative companies responded rapidly.
“Our COVID-19 R&D Loan uptake underlined this, with many digital businesses needing the support to speed up their activities to meet demand and seize new opportunities,” says Mr Jarvis. “It’s encouraging to see them raising investment, hiring and growing. We expect to see some great success stories out of this sector at a time when our economy is hurting.”
One such example is Kiwa Digital, an award-winning media tech company that is forecasting double-digit sales growth through the impact of COVID-19 on the media industry. Their VoiceQ software, which automates dialogue replacement in the post-production stage of film and TV shows, is widely used for major studios and video streaming companies like Netflix, Disney, Amazon Prime and Hulu.
Video streaming services have seen huge demand since COVID-19 hit. Kiwa Digital’s Voice-Q software has been in hot demand for the dubbing of foreign-language films and TV series this year. 2020’s number one drama series ‘Money Heist’, number one documentary ‘The Last Dance’, and four of the current top ten Netflix Originals were localised with VoiceQ.
“Our digital technology is world-class and well respected globally,” says Steven Renata, CEO of Kiwa Digital. “For us, COVID-19 simply sped up a digital trend which was already happening. Where before COVID big businesses were slowly considering using our software, they are now seeing it as a must.”
Jarvis says there is a real excitement amongst the 300 founders and CEOs attending this year’s Southern SaaS, a Callaghan Innovation organised virtual conference for Software-as-a-Service (SaaS) businesses.
SaaS businesses are Callaghan Innovation’s fastest-growing customer base, with the agency assisting more than 700 companies across its suite of R&D, commercialisation and innovation services. “Globally, the sector is very competitive and fast-moving, so our support aims to build the capability and networks local SaaS businesses need for high growth,” Jarvis says.
Centrapay is a Kiwi founded alternative payment platform, born out of New Zealand’s first lockdown, that has doubled its New Zealand team in the last three weeks. After starting in April, it is on track to do $1m in revenue in its first year and has this month released a disruptive payment technology platform with zero transaction fees for processing electronic transactions; either peer to peer between consumers or on merchants existing EFTPOS terminals. Co-founder and CEO, Jerome Faury, says lockdown really forced the company to review an earlier business model.
“Covid-19 forced us to look at how we move from being ‘nice-to-have' to an essential offering. Transactions fees are the third largest cost for most retailers,” says Faury. “We remove these transaction fees, allowing retailers and people to transfer value directly, using the digital wallet on their phones. It saves money, time, and fundamentally changes the nature of payments. We’re pretty excited about it.”
According to TradeMe, the median salary for an IT professional in New Zealand is $105,000, almost twice New Zealand’s average salary of $62,000. New Zealand’s median salary is 35 percent lower than the US and the digital sector offers the higher salaries needed to boost our overall GDP.
With 47 percent growth in export sales from digital service companies between 2017 to 2019, and the sector’s higher than average salaries1, building a strong, growing digital sector is good for the whole of New Zealand, Jarvis says.
“Our focus is on growing this sector. If we had 100 Kiwi SaaS businesses performing as well as the likes of Xero, that would be a real game-changer for New Zealand’s economy.”
Faury says that the key business intelligence required for the 2020s is AQ – adaptability - especially in the digital sector, and this is an area where New Zealanders absolutely excel.
“Kiwis believe they can solve any problem. Things get thrown at us and we adapt, quickly. It bodes extremely well at a time when entrepreneurs are the business leaders of this time.”
