Sergey Solovyev: ‘We have set the task to develop on the local markets of Central and Eastern Europe’
The director of ICL Services — about the development prospects for the Russian market of IT-solutions, the risks facing the export-oriented company and the challenges facing the industry
'I'm sure, there is every opportunity to make IT industry one of the key export industries of Russia in the coming decade,' said the Russian president at the annual message to the Federation Council. The representatives of the industry have someone to look up to. ICL Services is a structural unit of ICL group of companies, operating on the international market of IT-outsourcing since 2006. Today the company employs more than 1,000 employees and its pool of customers amounts to about 50 large companies in 26 countries. ICL Services provides 24-7 IT services in Russian, English, French and German. Today, under the management of the company there are 6.45 PByte of the data store, 14 thousand servers and network devices. The total number of users of the services of the company is 60 thousand around the world. By 2020, a number of its export services is to be at least 32 million U.S. dollars.
'Our major risk is geopolitics'
Mr Solovyev, what was the specialisation of the company in 2006 when it started to operate? How has 'the product line' changed?
It is not quite correct to tell about specific products in this case — we are talking about the portfolio of services. We started with the development and support of software and one of our first customers were companies from retail, for which we redeveloped software, 'projected' it on the new technology. A division of the parent company, from which ICL Services has grown, was a division of programmers and developers. In the course of development of the company, we were developing new directions. New not only for ourselves but for the whole country. Including the direction of the remote management of data centres and complex server-based IT-infrastructure of large companies and corporations, often called Remote Infrastructure Managment.
What industries, companies, corporations are the key ones today?
The architecture of data centre, core of IT infrastructure, depending on the industry are changing insignificantly, and hence its support has no fundamental differences. Today we provide support services for the banking sector, retailers, the mechanical engineering companies and of oil and gas industry, companies operating in geological exploration and extraction of minerals.
Now the company operates in several directions:
Service Desk creating and maintaining a single point of contact responsible for receiving, registration, routeing, coordination and resolution of all queries related to IT. This service is the most popular among the Russian customers of the company. We provide field support on the territory of Russia and CIS countries. Third — support, transformation and integration of IT infrastructure and systems, ensuring their smooth operation. Another direction is the development, implementation and maintenance of applications. This segment includes the development and integration of software, maintenance of software of other manufacturers, the service of an independent testing and the service of migration of applications and databases. Finally, we deal with IT and business consulting.
Today we provide support services for the banking sector, retailers, the mechanical engineering companies and of oil and gas industry, companies operating in geological exploration and extraction of minerals
What is your expert opinion on the current dynamics of the Russian and foreign IT-markets?
Before 2014, the Russian market grew about 10% a year. Today, the growth — if we consider in rubles – has decreased slightly, in the currency it has moved into the negative range. The foreign market is growing much slower as by maturity it is ahead of ours at least by 10-15 years.
We are growing much faster than the market, and by 2020 we are to rise at least 60% in comparison with 2016, an optimistic goal is a twofold increase.
What share of orders in your portfolio today does account for Russia?
A little more than 10%.
Can you call the volume of your export revenues?
$22 million in 2015, the lion's share in the export portfolio — about 80% of services provided for clients from Europe. Over the past five years, the company has been growing by 37% on average. In 2016, ICL Services is expected to grow by 20% and its turnover to reach 1,85 billion rubles.
This year you have opened an office in Belgrade. Could you tell us more about it, what is the purpose?
In August this year, ICL Services opened its subsidiary in Serbia. The idea to open such location occurred to ICL Services together with partner Fujitsu about a year ago. It was supposed to be designed for those customers and partners of Fujitsu who wish to obtain high-quality service based on our processes, provided not from Russia. The office in Belgrade provides services in accordance with customer requirements to the reliability of its operation, in accordance with information security standards, and also provides the required parameters for the growth of the company.
Is the office already providing services?
Surely. The first service that was provided this summer — remote monitoring of IT infrastructure 24-7, as well as the services of remote support of IT infrastructure (Wintel, Unix, Storage) with a focus on services around the clock.
Does your European expansion involve only the provision of the service to customers?
No. We have set ourselves the task to develop on the local markets. On the territory of Serbia as well as in other countries of Central and Eastern Europe. The policy of local development involves, in particular, the creation of Competence Center for the most popular services in the regions. It is the high-tech service Remote Infrastructure Management, cloud solutions based on OpenStack, multilingual Service Desk and services for information security.
In this case, who are your main competitors on the international markets?
First of all, the Indian IT companies, with their huge resource base and resorting to dumping in order to capture the market. However, not only competitors form the risks — often the main risks for us as a company working in foreign markets are associated with geopolitics. Over the past two years, we have repeatedly faced with the difficulties caused by the attitude to Russia. A simple example. A Western company gives IT to manage to the Russian company for five years. The process of transfer of the service from one service provider to another can take up to six months. It is almost the same time for the process of 'reverse withdrawal'. What are we supposed to do if the service due to certain political decisions can be stopped immediately? A customer itself also takes big risks because in case if you need emergency transition of a service to another provider, additional costs can amount to hundreds of thousands of dollars, besides you may have no time for that, and if to take into account the possible losses from the forced suspension of the services — it is millions of dollars. It should be understood that not all customer risks can be shared with the service provider, although the risks of the latter can be amounted to hundreds of thousands of dollars within only one service contract.
In addition to difficulties due to geopolitics, what else can hinder the development of the company on the Western markets?
The rigidity of the Russian legislation in the field of customs regulation and currency relationships, sometimes bordering on the absurd. The standards, which the company has to follow, including requirements for accounting and documentation of transactions formulation, no longer correspond to the reality, in which lives and develops the Western market. These 'features' cause perplexity of our foreign partners, sometimes bordering on outright irritation. A case in point — the requirements for registration of foreign exchange revenue: according to the current Russian law, a company-customer is obliged to pay for the services of a Russian contractor within a specified period of time. If within this period the money is not received on the account, then, according to the current regulations, the contractor is fined, the amount of which in some cases can be up to 100% of the payment amount. Thus, if a customer has any questions on our work — for example, he may require checking the correctness of billing, since the scope of work under the contract may vary from month to month — we, as the contractor, risk of incurring double losses and have to put pressure on the customer to demand an immediate payment, even risking to worsen the relationship with them in a long-term contract.
Mr Solovyev, what will determine the vector of development of the industry in the near future?
I am sure that this will be qualitative modifications of technological processes and mass departure to cloud technologies. All this will allow the companies to reduce the use of own IT assets without the losses for the effective solution of tasks connected with informatisation of the processes. But it is also the main challenge: under conditions when a solution of tasks can use all variety of devices, from smartphones to servers and mainframes, we need to maintain own competencies in order to be able to continue to service the technological IT processes.
About the company:
- Average annual rate of revenue growth over the last 5 years: 37%
- Amount of exports in 2015: more than 1,5 billion rubles
- Share of exports in revenues in 2015: 86%
- Number of staff in 2015: 1 153 people
- Output per 1 employee: 1.5 million rubles
- Planned for 2020 amount of revenue:
— ICL group of companies — 9.0 bln rubles;
— ICL Services — 4.06 billion rubles.