St.Petersburg, Russia
November 14–15, 2019


Meet SECR speakers: Eugen Schwab-Chesaru, Vice President Research – Head of Central & Eastern Europe Digital Business Services, teknowlogy Group/PAC

Eugene Schwab-Chesaru talks about researching the IT market in Central and Eastern Europe, work features with russian clients and the perspectives for Russian companies in global markets.

Eugen will present the report “Trends and Opportunities in the global Software and IT Services industry” at SECR 2019.

Interview with Eugen

Hello everyone, today we speak with Eugen from Romania.
Eugen, could you please pronounce your name correctly?

Actually, Romanian – Eugen Schwab-Chesaru. In English Eugene is fine. Or Evgeny, everybody knows me in Moscow, in Russia as Evgeny from PAC.

You worked quite a lot with Russia. Could you please tell us a little bit more about your background?

Yes, I have started my work with the PAC more than 20 years ago. By doing market research of strategic consulting services dedicated to the software and IT services industry in Central and Eastern Europe. For us the definition of Central & Eastern Europe is everything from Austria to the East. It starts from the West, starts from Poland and ends with Russia, including as main focus countries Russia, Poland, the Czech Republic, Slovakia, Hungary, Turkey and Romania. But we’ve been working also quite significantly with the markets from Ukraine, Bulgaria, even from Serbia. So, actually we have the office in Romania dedicated to Central and Eastern Europe, and I’ve been managing this office for more than 20 years.

With Russia we started more than 15 years ago, actually in 2004. We did the first round of meetings, something like 20-30 meetings in Moscow, and just a few meetings in St.Petersburg, at that time. And since then we’ve been in touch with the Russian software and IT services players especially large and mid-sized companies, focused on the local market. But, as you can imagine, with our global and European coverage of software and IT services industry, we’ve been in touch during the years with a lot of offshore and nearshore IT companies, some of them come from Russia, and some of them very known actually in Europe, United States and globally.

And what is the essence of your work, what do you do?

We are in the middle of what the strategic marketing of IT companies need. It is about market research, market analysis, competitive analysis, up to the specific analysis forecast and strategic recommendations for software and IT services companies. So this is ~75-80% of what we do, the core of our business, and it is what our group has done in the last 45 years across Europe and globally.

But at the same time we’ve been working, especially in the last 10-15 years, quite a lot with, let’s say, users. The user side and the investor side. But it’s always about software and IT services markets, topics and players. We are asked by, for example, CIOs or CIO communities to offer them the pictures or our understanding and forecasts about the development of different technologies, different markets; the positioning of different companies in specific areas of specific technology areas or specific business area.

And for the investors, actually, it has accelerated in the last 5-7 years, because a lot of private equity investment funds. Financial institutions come to us asking for advises, for our consulting services, regarding the best areas to invest. Or when they already have some target for acquisition or for the project, even minority investment, they usually ask for our opinion. And for kind of industrial vigilance, which is actually an analysis of the business plan of that business put in the context of the market and based on our understanding from the Western side of the of the world, and the Eastern side. So, we are able to support them in taking the right decisions for future investments and to evaluate the return on investment for the companies they in, for the value of the company they are targeting.

This is something, let’s say, very specific as is approach. But at the end of the day it comes to the same story and to the same fundamentals. It comes to the market knowledge, to the trends in terms of technologies and types of services, it comes to the same analysis of the demand and of the supply side. So, there we are consider that in Western and Eastern Europe every point, where you have three coordinates. One – is a code, a software product or an IT service. The second coordinate can be vertical like banking, or the manufacturing, or public sector and so on. And the third – is geographical coordinate, like region or a region of country, or a group of countries. So each point like this, regardless the business or the customer: it can be an IT business, it can be can be end-user, it can be investment – we can analyse, make recommendations and support the customer into the right journey to reach some goals. But this is the positioning, so in order to be able to offer that, we are in permanent contact with the IT companies and also with the IT decision-makers.

This is why we have an extensive survey, that we do together with several partners. Especially in Western Europe, or the United States and globally. And also in Eastern Europe, but to smaller extent, because of the size, you can imagine. But we carry out this survey every year, because we want to get the most of, let’s say, current status of the strategy and IT budgets evolution and behaviour on the user side.

And also we are quite detailed in some of the conversations we have, in some questionnaires, because for the main topics that are currently hot on the market – like cyber security, like digital customer experience, like cloud computing, like Internet of Things, like business applications related services, combined with cloud and cloud migration, and so on –  for all these topics we get very valuable insights from IT decision-makers, regarding their intentions, their plans, their budgets, the phase in which they are with a current project, that they have started several years ago. So this is also part of what we do.

And another component that is quite unique especially for Western Europe, for Germany and UK, is our grades database. Every year we follow the trends in the grades in the prices, that companies especially in Western Europe (I mean large and mid-sized companies headquartered in Western Europe) are ready to pay for a lot of types of services in different types of agreements. We have huge rates databases, part of them we offer on our research program, and I said it is unique, because you don’t have a similar analysis actually on the market.

So with these three components: very deep analysis of the supplier side, the user side surveys, and the rates database, in which we have actually on-site rates and offshore rates from India (we analyse separately both sides, because it is not logical and is not useful to make an average between both of them, because there are very different cases), so with all these we have this holistic view on the IT software and IT services industry. This is our positioning and this is what we propose in Eastern Europe, and this is what we try to do also in our countries here, including Russia.

Your talk is called “Trends and opportunities in the global software & IT services industry. What it will be about, will you share some of your research?

Yes, we are going to share the most recent result of our end user survey, combined with our view about, what we think will happen, and what are the most important topics that we see.

We have a long list of 20 to 30 topics, that we propose during the interviews to the IT decision-makers, and at the end of the day we have 10-15 that comes first in the list, and more frequently mentioned. And then for these ones we will go deeper into details and we discuss about plans of investment and so on.

And we’d like also to share with  the conference guests what we think and how we see the right strategy for Russian companies, that want to be successful globally. Right approach in the Western world. And I’d also like to underlay some key differentiation between the buying behaviour in the local domestic market in Russia, some buying behaviours in Eastern Europe overall and from the most important buying behaviours in the Western world. Because actually the segregation is pretty high, so, it is very important in order not to lose time and money to understand these differences from very beginning. To address with the right services and the right approach the markets depending on their maturity and depending on their, let’s say, plans, in terms of investment. Because it’s extremely different.

So this is what I hope I will be able to show, of course, what I’m talking about – it’s something I can talk about in several hours, or maybe several days. But I try to give something, that is valuable in half an hour, and then if needed, I’d be glad to discuss more with people if they are interested.

When you talk with people from Russia, is it different from dealing with people from other countries?

People I have met, I usually meet with the top executives – so usually it’s middle management and top executives – so, generally I feel the Russian executives extremely well connected with what happens globally. And at the same time, if I compare Russian executives of IT companies with similar executives for example from Poland or the Czech Republic, or Romania, I feel them to be more proud to be Russian and to have a local market that is at least potentially full of opportunities. At the same time the target, they have in mind international expansion quite extensively.

So if, for example, you speak with somebody from Poland, with the company they work on the Polish market and they want to be more successful also in Germany, or in the UK, or in Belgium, or in Netherlands, they will speak about small steps, they will speak about trying something.

But if you have the same conversation with the Russian executive of a company specialised in the type of competency, type of services, they are very confident about their success in big deals. Even directly with large customers from Western Europe. They are used to deal with large organisations, they don’t have any complex, let’s say, of being in Eastern Europe, as you can see, from other smaller markets in other Eastern European countries. So, this is something very powerful and, I think, this is a fundamental. It’s a very important condition in order to be successful, because things grow very fast and everything happens very-very quickly today in the IT industry.

If you planned small steps and so on, in order to offer them, to have a go to market at a lower speed, at the end of the day you may be surprised. That if you think, that you’ll be maturing in three years, you can be surprised, if in three years the conditions will be different from the moment, when you started the strategic plan. So, this is, why I think, it’s good to take decisions pretty fast. Also to accept the risk. And, I feel, that Russian companies, at least most of the companies I’ve had a chance to meet in Russia, they have this attitude. And if they want to go abroad, they are pretty direct, and they want to go pretty fast.

On the other side, I have met also quite a lot of Russian companies, that say, that they don’t need to go abroad, that it’s enough for them – the Russian market. It’s a lot of work to do in Russia, and I fully agree with them, because the Russian market is full of opportunities and full of population. And there is just the very beginning of the IT development, if we compare the budget and the spending to the to the GDP to be overall revenue of all costs of the companies in Russia. So the deportation is huge, and I fully understand the companies, that focus exclusively on the domestic market and don’t really spend the time and energy looking abroad.

But there are different potential options and potential business plans, and both of them can be successful. However, taking in to account the competitiveness of the Russian labour force, and very good reputation of technical skills in Russia, and success stories of some companies, and projects, or even individuals in the IT world, starting from Russia – it would be a pity not to go abroad and not to use these comparative resources for global projects. From where the Russian companies can also learn a lot of things, a lot of business processes, and a lot of methodologies, and experience, that it may be too early to have such experience in the domestic market.

A mix like this  is beneficial. But we never think, that we have the right strategy, the right direction, and we come with with the template and give it as the perfect solution. No. It’s case case-by-case, and any business goal, any strategic goal can be good, if it is executed correctly, and if it is put correctly in the context of the market, of the demand, of the supply, and, of course, with the most important ingredient today – with the right human resources. The right skills, because this is the biggest – we should be very soft. I see the industry and this is driving actually the industry, and the market.

So I strongly believe that Russian companies can be much more visible in Western Europe. If I think just about half a million IT engineers that are missing today in Western Europe. If we count all the projects, that are not delivered, because of the lack of resources. And if I look at growth rates in the prices and the huge digital transformation plans of virtually all entities in Western Europe and United States, yeah, I can say that there is actually no limit for companies, that are really quite with the right technologies, with the right skills and at the first serious about delivering projects in the areas where there is high demand today.

Thank you for finding time and talking to us, and in the end, what would you like to wish to our participants?

Hopefully, at the end of the conference they will come up with a lot of ideas, with maybe a lot of answers to their questions, and why not, with even more willingness to develop, to invest, and to believe in the future of all the IT industry in Russia. And from Russia to the whole world.

Thank you very much! I’ll see you the conference!

Thank you!