A rising number of trained engineers and the high prices charged by global brands has led to the growth of Kenyan cloud technology providers as mid-size firms opt for local solutions.

Global brands such as Dimension Data and IBM are providing private and public cloud solutions for most banks, multinational corporations and the government, but the high costs involved lock out middle-size firms.

"Global brands charge higher costs because they have to fly in engineers, their operation costs are higher, which is fine for companies with higher budgets and big government projects," said Aaron Mbowa, CEO, DataPosit, one of the leading cloud providers in Kenya.

For banks and multinational corporations, setting up a hybrid cloud costs about $10 million to $15 million, while mid-size firms spend about $200,000 to $300,000 for private cloud and hosted solutions.

"Our competitive advantage is that we are able to scope the work and give an organization tailor-made solutions and scale it as they grow; most companies will invest millions in a service, yet they only use 40 percent of its capabilities," said Mbowa.

The need for security has forced many companies to set up a private cloud, buying colocation, disaster and recovery services from public cloud service providers. Most ISPs are providing colocation and disaster recovery services especially for banks that have laws requiring disaster recovery mechanisms.

"At the moment what we are seeing is a strengthening of security measures especially around physical security since co-location is the main service being taken up by our customers; cloud providers are seeking independent audits of their infrastructure to assure current and potential customers that their data centers have adequate security measures," said Joseph Kairigo, managing director of Dimension Data Kenya.

Business for local companies is also coming from large corporations that initially invested in cloud technology from global brands but have been unable to sustain the high license fees, tech support and maintenance costs.

"Some companies do not incorporate or are not informed of the annual costs, which may be 10 percent of the original costs; we are getting business from such companies and they have come to appreciate our efficiency," Mbowa added.

One of the main selling points for global brands setting up data centers and offering solutions is that there is a shortage of experienced and competent engineers, which has made some companies spend more money and engage foreign companies.

"Kenya now has trained engineers in every aspect of cloud services; there are local companies partnering with global brands to deliver solutions, firms are making savings by engaging local firms," added Mbowa.

While in Kenya the skills may have improved, it is still a challenge in other Eastern and Central African countries. Most skilled engineers are usually taken up by international companies, who are able to pay top salaries.

"Skills shortage is most severe in countries outside of Kenya, we have done well by recruiting and training graduates from the Universities; however, we still face challenges filling in positions that required advanced skills," added Kairigo. "This situation has been exacerbated by the entry of original equipment manufacturers in the markets who are able to pay a premium for such skills."

While local companies have been able to provide unique and scaled solutions, there is still competition with global brands opening local offices to cater to foreign corporations that are opening up local offices. In some cases, decisions on service providers are predetermined, depending on the headquarters of the corporation. For instance, a U.S. multinational corporation is likely to opt for a U.S. cloud provider.

Falling connectivity costs have also meant that multinational corporations can operate their IT departments from their headquarters, eliminating the need to replicate services across the region. For instance, Airtel operations across Africa have been outsourced to India through IBM.