Local IT services companies are increasingly looking to export opportunities because the New Zealand market is too small and crowded.
Simpl Group, for one, hopes to increase its exports from less than 20% of revenue to 80% within the next three years.
Managing director Bennett Medary says New Zealand is being increasingly over-serviced, and the recent merger of his software consultancy with Oracle specialist Software Consultants (SCL) is indicative of shrinkage and consolidation in the local IT services market.
Simpl Group is already working overseas, selling its intranet-based portfolio management tool, 3PM net, and attendant training and services to the Dutch medical publishing group Wolters Kluwers. Wolters Kluwers, the owner of Adis International, uses 3PM net to manage multiple projects across its international portfolio of companies. Simpl Group was deriving 20% of its revenue from overseas last year but lost ground after the September 11 attacks, Medary says.
The export-and-expand strategy is being taken up by fellow services companies SolNet, Axon, gen-i and Infinity.
SolNet managing director Mark Botherway says the New Zealand company’s annual software development, professional services and associated support revenues are approximately $15 million, while SolNet Australia, which operates in Sydney and Melbourne, is about half that after less than two years. The expansion into Australia began in earnest in late 2000, when SolNet bought the 22-person Melbourne firm Lifeboat.
“The local market is too small and volatile to sustain a large services business,” says Botherway. “To attract and retain world-class personnel we must provide them with world-class remuneration and work/career development opportunities. To do this in a sustainable way we must look overseas for work.”
SolNet is also pursuing business in the US, Singapore, Germany and Australia. It recently made its first international sale of a locally developed product called PerfectLoad, an HTTP and Java-oriented load-testing tool that simulates thousands of users executing requests against a web or application server.
John Bessey, head of gen-i’s Australian business, says at the end of its first financial year gen-i Australia accounts for 6.5% of gen-i’s revenue. The company expects to double that this year. Gen-i employs 46 people in Sydney and Melbourne. Bessey expects that to increase to 110 staff by this time next year.
In Australia the company has focused on designing enterprise infrastructures, particularly thin-client architecture, and is now Australia’s biggest Citrix implementer, says Bessey. It recently won a multimillion-dollar contract with NRMA Insurance (which owns State Insurance) to design and roll out a Citrix MetaFrame solution to more than 10,000 users.
“The key for us is, as well as moving a few New Zealand people across for their intellectual property and culture, we’ve predominantly hired Australians,” says Bessey. “We’re creating an Australian entity on a permanent basis.”
Meanwhile, Inifinity Solutions, the result of a merger in 2000 between Trilogy Systems, Comtex Group and Madison Software, has also opened an Australian office this year selling transport and legal solutions.