The company Luxoft, a Russian custom software developer, bought the Romanian counterpart on the shop – the company ITC Networks, dealing with specialized software for telecom. With the new acquisition Luxoft plans to become a leading outsourcing company in Russia in 2008 on the basis of experts no hurry to forecasts, advising wait until the end of the year.
According to CNews гендиректор Luxoft Dmitry Loschinin, with buying in ITCN Luxoft will command more than 600 professionals. Negotiations have been lengthy, the decision was taken fairly quickly. As a result, Luxoft will be able to expand its competence in the telecommunications industry, generate a custom list of companies such as Avaya, Nortel Networks, Trapeze Networks and others. The entire line of ITCN will be further developed under the brand Luxoft; organizational structure and service line ITCN will also be restructured in accordance with the current structure of Luxoft. The entire leadership of the team and will continue to work in a united under the brand company Luxoft.
The amount and details of the deal are not disclosed, knows only that the ITC Networks annual revenue was $ 27 million and average annual growth rate – 70%. An estimated IKS-Consulting analyst Anton Voryhalova, the value of the transaction can be estimated at approximately $ 45 million It also notes that IBS Group Holding shares fell 1.2% today, but it is hardly related to the purchase – on European markets saw a correction on July 22 within the limits of 1-2%. “In any case, shares malolikvidny IBS, and this transaction is unlikely to significantly affect them – because Luxoft only one of the companies in the IBS Group Holding”, – said Voryhalov. In “Finame” value of 100% of the shares ITCN estimate of $ 35-40 million.
Romania, according to Loschinin, was chosen for the expansion of geography Luxoft for many reasons. First, the Romanian IT industry shows the highest growth rate in excess of 25% a year, growing by more than 40% a year in exports. Each year the Romanian universities produce about 7 thousand IT professionals. In addition, Romania took a 5 – first place in Europe (11 – e in the world) under the scope of the programme Cisco Networking Academy (about 3 thousand students, 105 academies). Another significant reason for the head of Luxoft, – that the value of intellectual work in Romania is lower than in Poland, the Czech Republic or Hungary. “We were looking for a company with strong industry positions – he says. — ITC Networks – the leader among telecom software developers in Europe “. Among other factors – good geographical position of Romania, as well as the absence of the visa regime within the EU.
Dmitry Loschinin: Luxoft intends to expand presence in Europe
Nevertheless, as stressed Dmitry Loschinin, say, Luxoft only interested in Europe – wrong. “In April of 2008 we opened a development centre in Vietnam – he recalls. — For a company more profitable to expand the geographic presence in Southeast Asia on their own “. The next strategic step, according to chapter Luxoft – expanding presence in Europe and the deepening of industrial competence.
Colleagues in the industry called the purchase of Romanian companies is quite natural step. “Romania enters the European Union – having received the resource base in the EU, Luxoft has the opportunity to offer its customers place orders in the country, close to them geographically and legally – said Svetlana Vronskaya, Director of Corporate Communications” Reksoft “. In addition, analysts in recent years, Romania called one of the most promising countries for placing orders for software development in Europe. Despite limited resource base of IT professionals in the country, the value of work here is much lower than in neighbouring Czech Republic or Hungary, with that level is no worse. The same causes and the president calls the “Russoft” Valentin Makarov. He also notes that settled in southern Europe, Luxoft, may be looking for customers in France and Germany.
Of the benefits that will gain from buying Luxoft ITCN, Igor Piruyan, vice-president of Mera Networks, called the expansion of customer base and gaining experience in the telecom ITC. He also enumerated the potential risks for Luxoft, the new acquisition: how they relate to the integration of the new company structure in Luxoft, and that rising costs in Romania limit the possibility of using ITCN as a centre for the development of customized software already in the medium term. “This affects both new-found relations with clients, and at the possibility of maintaining expertise and knowledge newfound ITC”, – believed Piruyan.
Future plans at Luxoft ambitious: to become the largest outsourcing company in Russia and Eastern Europe, whose consolidated revenues for fiscal year 2008, according to own estimates, should exceed $ 150 million revenue company in 2007, according to public sources, grew by 52% to $ 105 million in the rating The 2008 Global Outsourcing 100 of the International Association of outsourcing (IAOP) Luxoft takes 59 – first place, while EPAM Systems (whose revenues for 2007 were estimated CNews Analytics, was $ 113 million) owned 37 — e. For Luxoft followed by IBA (67 – first place), Mera Networks (82 – first place), Intetics (83 – first place), Auriga (90 – first place) and DataArt (93 – first place).
The closest competitor – EPAM – in no hurry until the predictions in advance, but on the possibilities of a competitor highly commended. “Now July, mid-year – said Anatoly Gaverdovsky, senior vice president EPAM Systems. — Very strange to do now forecast at the end of 2008. Will the end of the year, look. When all announced their figures, will understand how it is realistic. What Luxoft – a leading company, it is obvious. Will they be number one, whether they would be number two – lives show “.
President “Russoft” holds the same views: say which of three leading export software developers working in Russia, will be the largest – EPAM, Luxoft or IBA Group – will be only on the basis of the year. “The fact that there exists a market competition – a very cool in itself – said Valentin Makarov. — This greatly contributes to its development and expansion of the share of Russian players on the world stage “. An estimated “Russoft”, through new acquisitions largest Russian export software developers will be sustained this year the growth rate of 50% and higher, while smaller companies are unlikely to repeat last year’s momentum (the industry average, it was just 50%). Nevertheless, according to Makarova, a growing share of exports of food companies, new markets, the largest of them – Kazakhstan, Ukraine, Belarus. Therefore, the portion of exports, which will be lost because of the crisis in the U.S., Russian exporters will be able to PO, in particular, offset by new regions.
According to preliminary estimates, in 2008 the total amount of Russian offshore software market will reach $ 3 billion in 2007, this figure was $ 2.3 billion, which is 46% higher than in 2006 Reasons for positive dynamics in the market on exports from Russia — the welfare of the population growth companies and revolutions, the fight against piracy, State support, as well as increasing income employees of companies engaged in the sector. The total number of personnel working in Russia for export of software in 2007, an estimated “Russoft”, more than 80 thousand people.
Note also that Luxoft is a winner in the category “Best Project of the Year in the international financial market” for developing CRM-system for Deutsche Bank and CNews AWARDS Prize winner in the nomination “The expansion of the year”. [Cnews]
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