- Web start-ups generate fast return – Collins (03 March 2010, Business and Leadership)
- Open-source hardware takes steps toward gadget mainstream (04 March 2010, CIO)
- Cloud Computing’s Three Revolutions: Part 3 (04 March 2010, CIO)
- Dublin gets ready for European City of Science 2012 (04 March 2010, Business and Leadership)
- Romania rises as outsourcing target (05 March 2010, The Diplomat)
- Improve productivity with Agile Scrum development (03 March 2010, CIOL)
- Swedish Appetite for Outsourcing Doubles (02 March 2010, Waters News)
- CeBIT 2011: Neues Konzept (08 March 2010, Silicon)
- IT-Recht 2010: Worauf sich Unternehmen gefasst machen müssen (03 March 2010, Manager Magazin)
- IT-Industrialisierung bei Banken: An SOA führt kein Weg vorbei (03 March 2010, CIO)
- Software für den Aufschwung (03 March 2010, FTD)

- The business value of Information Security (23 February 2010, CIOL)
- Facebook deemed world’s most innovative company (23 February 2010, Business and Leadership)
- 3 tools to improve collaboration in your company (24 February 2010, Infoworld)
- Compliance Under a Cloud (25 February 2010, CIO)
- Cloud computing and its relevance in India (25 February 2010, CIOL)
- Recession shifts IT service management into fast lane (25 February 2010, Computerworld)
- Study: Most multinational companies use IT outsourcing (25 February 2010, IT World Canada)
- Offshoring: Should the government send IT work abroad? (24 February 2010, Silicon)
- Computerwoche-Anwenderstudie Teil 1: So planen IT-Entscheider 2010 (01 March 2010, Computerwoche)
- Deloitte-Studie: Was IT-Dienstleister gegen Umsatzeinbrüche tun (24 February 2010, CIO)
- CeBIT 2010: Was dieses Jahr alles anders werden soll (22 February 2010, ZDNet)

In this climate of considerable uncertainty which characterizes the beginning of 2010, the Pentalog Group is maintaining a provisional growth rate of at least 20% throughout this quarter. This figure is slightly insufficient to meet the objectives of the plan 30-2013, but will meet and even exceed the objective of the plan 14-2010, given the exceptional prevailing activities throughout the year 2009 (+50%).

In January and February, business has been particularly hectic with the conclusion of several new business affairs in France, Germany and Austria. In France, Pentalog has signed an initial deal in January (for a fixed price project, to be developed in Hanoi, Vietnam), which will start in February, with a company from Sofia Antipolis. Production operations also were launched with a leader of free ads in Paris (to be developed at the Competence Center in Iasi, Romania) and with a software company in the tourism sector in Lille (with development also at the Competence Center in Iasi, Romania). Furthermore from Lille, a subsidiary of a well known telecom operator has placed an order with Pentalog to put into operation a small new Competence Center in PHP along with another-one in Java. With clients in Ile de France, in the West, South West, South, Southeast and Northeast, our operations now cover almost all of the French territory.

In Austria, Apa IT (the IT department of the Austrian Press Agency) who is already a Pentalog client has ordered a new Competence Center, to be located in Sibiu, Romania.

In Germany, LHS-Ericsson (Frankfurt) has also increased the size of its Competence Center and this is being done in two stages, going from 12 to 25 employees. 6 new engineers have already joined the team in February.

The total number of business proposals established in the first quarter could exceed the previous record and it will help sustain a higher growth rate. All the new sale services and online references are definitely having their effect.

To learn more about these new online tools:
- www.choosingmyitserviceprovider.com:
An innovative and user-friendly assistant allowing a customer to browse the key questions when looking at offshore services. At the end of the questionnaire, you will receive your proposal and at the same time you will be able to make an appointment with a Pentalog director. At any moment during this process you can save your data, to return to it later in a secure and authenticated zone. This site assists you in your process of purchasing IT offshore services.
With www.choosingmyitserviceprovider.com, it is now possible to build an offshore dossier in 10 minutes.

- A price maker:
You’ll find completely transparent rates for all of our available services in EUR and USD, for time & material as well as fixed price projects. You can even create your own dedicated team.

- www.madeinoffshore.com:
This site contains some of the Pentalog client references. These case studies illustrate the experience Pentalog has in projects that go from ten man days projects to 10 man years projects. All our success stories can be sorted by type of services, by industry, by team size, country or type of project.

Since I became Sales Director I haven’t taken yet the time to look at all the indicators in this sector. My first responsibility was to boost sales and only then count the points.

Since early this year I have become more involved in this part of my activity and have taken the time now to step back from our commercial activities.

In Pentalog France we have an enormous advantage: years of market development, web ranking, with innovations that allowed us to receive requests from prospective clients “naturally”. Whether by searching the web or through social networking, we received on an average 0.71 requests per day since the beginning of this year!

Amongst these 25 requests, some did not complete their requests, others have already received a negative response but there remain a good fifteen dossiers waiting for a response or for which an offer is being elaborated.

And since we also have started using the metric system in our business proposals, I can announce that the average time spent responding with a complete proposal is just less than 3 days.

It will take another few weeks to refine this data and a few months to see if time spent on offers can be correlated with the outcome of the business proposal.

Yes, from a physical point of view, one seminar after another held every weekend, are difficult. Especially, when they were held with more than 2000 kms between them. Luckily, except from the intellectual rhythm that is required, two seminars I attended two weeks ago were held in Brasov, where it brought together both the Eastern Unit Management Team (the Heads of the branch offices) and Management under the direction of Aymeric, for the Technology, Infrastructure, Quality, and Information system of the company. As for last week in Orleans, the first Business Lines seminar was held under the care of Sophie and Monica.

I believe that never before have our seminars reached such a high level of professionalism and innovative research. Pentalog has indeed recognized the sustainability of the crisis. If we want to defend our jobs, employees, growth, revenues, we need to develop strategies that make us stand out even more so, with rare offers, justifying the higher margins than those of our competitors which give us the means to develop projects even more rapidly.

It is difficult for me to touch on each subject that was discussed. Generally in technology, infrastructure, quality, software groups, we particularly focused on different ideas concerning the Pentalog Lab and the Incubator. We now can do an X-ray on the Lab: 4 vertebrae, corresponding to 4 projects embodying a new strategy, breaking with the past. The Lab’s mission has been clarified, equally in the manner that it functions. It will work, as I already have mentioned, for the ENTIRE group that is to say by integrating the present and future subsidiaries. It will also participate in client missions.

From the Business Lines meeting, I retained 2 principal ideas complementary to each other: Cloud and Green IT. How, indeed, to offer support to our clients in these difficult times? We must be with them, both in technology and development and by adapting to their business models. But what is true for our clients, can it be less true for us? Pierre, who is possibly the most aware amongst us about Green IT, he may possibly be in the future responsible for the carbon assessments for offshore activities generally. Furthermore, we believe that all of Pentalog must build a real cloud for its proposed intellectual services; this should be built around the brick & mortar structures already in place, in order to facilitate access to human and technical resources. I am thinking about management tools for dedicated teams and other competence centers, I am also thinking about project managers and productivity, management of the skills of our team members… All these tools will be offered to our clients, both to optimize overall management of our competence centers but also for their own teams. Already, two companies, in addition to Pentalog, are using these new production tools and perhaps soon a third-one.

The sharpest minds have already understood that the 4 innovative projects which I spoke of for the Lab will include some of the services of the first IT Cloud that I already mentioned… Of course, the major projects, related to the metric system and productivity management will be among them, as well as some of the projects of People Centric concerning skills assessment and management.

These projects will improve the Pentalog services, to distinguish them, making them even more accessible than they already are by using our intensive online marketing, which is already one of the best of many online services. But they will also provide solutions in a market that is redefining its services, where it has been forced to face simultaneously the challenges of the cloud, industrialization… and finally to propose innovations for the future of our profession.

Britain’s debt set to be higher than that of Greece (19 February 2010, Telegraph)
- Staples Turns Out an IT Outsourcing Option for Small Businesses (19 February 2010, CIO)
- Europeans Prefer Staff Suppliers to Outsourcers: Forrester (19 February 2010, CIO)
- Europe a growth market for outsourcing (16 February 2010, The Hindu)
- Facebook to launch ‘Zero’ version for mobile phones (17 February 2010, Yahoo News)
- The painful truth about age discrimination in tech (17 February 2010, Infoworld)
- VC investors see potential in Irish software sector (18 February 2010, Business and Leadership)
- IT groups warn Chinese on regulation (21 February 2010, Financial Times)
- IT-Abteilungen geht das Geld aus (22 February 2010, Financial Times)
- “Open Source BI ändert den Markt” (19 February 2010, Silicon)
- CeBIT: Haus der Nationen wird zum CIO-Treffpunkt (18 February 2010, Silicon)
- IT-Fehler verursachen Milliardenkosten (16 February 2010, CIO)

-

- IT spending in western Europe to reach US$68.6bn (09 February 2010, Business and Leadership)
- IT Outsourcing: Why It Pays to Appraise Your Contract (09 February 2010, CIO)
- Global IT industry to return to growth this year (09 February 2010, Computing)
- Japan remains world’s No 2 economy (15 February 2010, Business and Leadership)
- Silicon Valley limps as India dashes ahead (12 February 2010, CIOL)
- What matters for the IT industry in 2010? (12 February 2010, Computer Weekly)
- Indian IT firms turn to Latin America: WSJ (11 February 2010, CIOL)
- Offshoring Research and Development set for growth (10 February 2010, Offshoring Times)
- Der Open-Source-Fahrplan für die CeBIT (12 February 2010, Silicon)
- IT-Branche wieder optimistisch (12 February 2010, CRN)
- Der deutsche IT-Markt erholt sich langsam (10 February 2010, CIO)

- IT industry fights tax changes (02 February 2010, Misaustralia)
- India Telecom outlook for 2010 is stable to negative (02 February 2010, CIOL)
- Asset Protection Offshore! (03 February 2010, PR Inside)
- Cairo ICT to reflect dynamism of the IT sector (08 February 2010, Yahoo News)
- IT recovery on, India ranks high (03 February 2010, Yahoo News)
- How will the Carbon Reduction Committment affect IT outsourcing? (03 February 2010, Computerweekly)
- IT Outsourcing: Why It Pays to Appraise Your Contract (03 February 2010, CIO)
- 10 best IT jobs right now: Source: The Industry Standard (02 February 2010, The Standard)
- Rumänien: Der Lockruf des Karpaten-Goldes (03 February 2010, Die Presse)
- Russland nach der Krise: Wütende Bürger trotz Wirtschaftsaufschwung (02 February 2010, Handelsblatt)
- Europäischer Outsourcing-Markt stark gewachsen (05 February 2010, Inside IT)
- Deutsche Sprache – schwere Sprache: Neulich in …Bangalore (03 February 2010, Computerwoche)

Wherever I go in the world, and see the different offshore IT structures, the more I realize they are better in every way than their Western counterparts. Whatever the point of view I take, the comparisons always turn to their advantage.

The idea of this article came to me while visiting St Petersburg when Alex and I visited a very promising local IT company. What did we see? A company, having a structure of 160 employees completely centered on the Scandinavian countries with work groups organized in competence centres dedicated to clients, having teams of 5 to 50 employees, just as we do in Pentalog. At Pentalog, we have 5 teams with over 20 employees, including two of 50. These large projects, let’s not deceive ourselves, is the dream of every large French IT company who often struggle to sell their solutions, then implement them and exploit them. Meanwhile, more and more middleweight offshore companies, comprising 100 to 1,000 employees, sign these projects, that fear, the lack of ambition and investment prevent older IT companies from signing.

We have not lost a SINGLE deal against the leaders in this sector in France for years, even when we were opposed by their best offshore centers. Why is this? Very often their sales force imagines that question is who has the lowest prices. This is totally false. The client is not looking at -42 instead of -39%. It makes no sense. Instead, we often had the opportunity to justify the slightly higher prices from those of our competitors by demonstrating proven, systematic quality systems and the importance of a management who is extremely involved in the production unit. Finally, we demonstrate that all the Pentalog actors behave as entrepreneurs. When I think about all these middleweight structures, often locally owned, they share these same qualities as we do. So yes, I do not really see the agility or the strength of these major French companies. They are big and do not take advantage of their weight when preparing a very big contract. And when comparing them to the giant Indian companies… only Cap could possible resist, and perhaps Steria?

Old? In regards to their offers, first of all. Competence centres, dedicated teams, fixed price packages are not a standard practice and this is felt commercially. The businesses that we are in competition with, usually do not have the legs for those matches of 5 sets or a dozens points, even a hundred or more. Their offers and their talk of quality is generally not sufficient to reassure a client that is sending offshore the maintenance or development of their owner applications. Most are too prosaic, glued to the price and technology, when it is a complete business model that they have to sell. The business method of these structures has not been reviewed in a long time. What about their means of steering and project management? They usually are completely non-existent in comparison with the smaller structures I spoke of; the NATIVES they offer complete outsourcing and a full line of tools to steer the project but also the contract. They have the methods, tools and the discourse. They are young and do not need to renew the old methodology.

Perhaps the picture I have painted is quite black but this is reality of the situation and I just cannot justify the “dreadful” reality that comes to mind. But, these companies end up seducing no one. Their employees do not adhere to the company’s project, which remains absolutely illegible most of the time and concerns only the investment and pension funds. Their customers post pitiful rates of satisfaction in quality surveys. Yet, as a result of industrialization policies, new architectures and maturity of our industry, there is a great deal to be done to create new markets, renewing methodologies, organization, work tools and control and finally the image of this sector. Instead of this, because of the dictatorship of financial markets (shares, always shares!), they continue to fuel gross margins, while with competence centers and clouds, capital expenditures have heavily appeared among the pioneers of the industry. Imagine for one moment the capital expenditures of Infosys! Meanwhile, the French IT system is losing its market share. It is fortunate for emerging countries and companies such as Pentalog are in the hands of real entrepreneurs, and how necessary it is to know how to make bets a little more complex than those of external growth and to dare to evolve towards a global market through industrialized competence centres, in order to give this sector its patent of nobility.

In a few days I will come back to the dissatisfaction they generate for their shareholders too, finally, by comparing the results of offshore players, French tenors and Pentalog.

A few weeks ago, Pierre, head of the IS Business Line, published an article on the topic of the metric system. Here is a 2nd post concerning this subject:

As a follow-up of an earlier post on metrics, I would like to come back to the advantages of this system.

While participating in a steering committee this week as part of improving our common practices, the subject of estimates was raised by our client. Without going into details, they asked us to assure them that we had taken into account a margin of risk in our assessments. The client had indeed noted that we had often exceeded our estimates concerning a precise aspect of the project.

We approached the subject by explaining that it would be appropriate, based on the statistics between the estimated workload and actual workload, to establish a breakdown of the project into work units and assign to each one of them a development load based on these statistics.

The concept was discussed. Naturally we then discussed the gradual establishment of a metrics system for the project and reminded the client of the benefits that this would incur. Those advantages that did not fail to catch his attention.

We therefore explained, that by properly defining the work units, the metric system would allow for more reliable estimates and a further increase in the transparency of the method we would use to assign workloads to the functionalities of his product. This added to the fact that he would know in advance the number of days for the realization of a new feature, our client did not hesitate a moment before approving the concept.

Furthermore, we also stressed that after the establishment of the metric system, time spent on a subject would be exclusively devoted to the contents of a batch rather than justifying the expenses. Indeed, this is a significant advantage for the introduction of the metric system: focusing on the contents in order to optimize them.

Of course, the maturity of this system will naturally lead to the optimization of the estimates by better controlling the performance of team members. And from this point of view, everyone wins.

In conclusion, I would like to note an observation I made while attending the steering committee: the subject of the metric system is now part of the Pentalog team vocabulary.

- Deloitte outlines priorities for CIOs in year ahead (26 January 2010, Computing)
- Economic rebound will drive demand for ICT (28 January 2010, Voice and Data)
- No slowdown for IT jobs: Candle ICT (1 February 2010, itnews)
- A Big Year for ‘Socialytic’ Applications? (29 January 2010, CIO)
- Is 2010 the year of location-based services? (29 January 2010, CIO)
- Moldova: A Corner of Potential in Europe (27 January 2010, BusinessWeek)
- Predicting the role of outsourcing in 2010 (26 January 2010, Financial Director)
- Can outsourcing and cloud save stretched IT departments? (25 January 2010, Silicon.com)
- Moving forward in OpenSource (25 January 2010, CIOL)
- Messemacher diskutieren Perspektiven von CeBIT & Co (1 February 2010, Computerwoche)
- Energieverbrauch, Outsourcing: Gartner blickt in die IT-Glaskugel (29 January 2010, CIO)
- Forrester-Ranking: Deutscher IT-Markt legt 2010 um elf Prozent zu (29 January 2010, CIO)
- Die Hälfte der Schweizer Firmen nutzt SaaS (29 January 2010, Swiss IT Magazine)

- IT to go outside IT department, says Gartner (18 January 2010, Computing)
- Europeans say “ditch Internet Explorer” (18 January 2010, Computing)
- Internet video and Apps on TV soon (19 January 2010, CIOL)
- Open source under threat from ‘grey’ IP laws (21 January 2010, CIO)
- IT management shake-ups sweep finance sector (20 January 2010, Computing)
- Global IT industry to return to growth in 2010 (21 January 2010, Computing)
- The Future of IT Application Architectures (22 January 2010, CIO)
- Outsourcing: Crippling Mistakes IT Departments Make (25 January 2010, CIO)
- India’s top outsourcing companies hiring and increasing wages (21 January 2010, Monterey Herald)
- US Universities increase interest in outsourcing (19 January 2010, Sourcing Focus)
- Nielsen-Zahlen: Werbung im Internet nimmt kräftig zu (19 January 2010, Computerwoche)
- Der lange Weg zum Komplettanbieter: Kampf der IT-Titanen (25 January 2010, Computerwoche)
- Was CIOs vor Cloud Computing abschreckt (22 January 2010, CIO)
- Arbeitsmarkt: Krise erwischt auch Informatikabsolventen (22 January 2010, Computerwoche)
- “2010 wird kein einfaches Jahr für uns” (19 January 2010, Silicon)
- CH-Unternehmen nutzen Social Media kaum (19 January 2010, Swiss IT Magazine)

- Cloud Computing: IT Operations Changes Are Mandatory (12 January 2010, CIO)
- IDC Telco Predictions 2010 (13 January 2010, Computerworld)
- Is the tech spending downturn over? (12 January 2010, InfoWorld)
- Outsourcing Advisors: 6 Tips for Selecting Right One (14 January 2010, CIO)
- 20% of Businesses Will Get Rid of All IT Assets As They Move to Cloud, Gartner Predicts (13 January 2010, CIO)
- IT budget cuts expected in 2010 (12 January 2010, Computer Weekly)
- Mitarbeiter deutscher Unternehmen haben europaweit die meisten Geschäftskontakte ins Ausland (15 January 2010, Computer Reseller News)
- Outsourcing-Deals 2009:Outsourcing-Ranking wankt (18 January 2010, CIO)
- IT-Branche überrascht die Börse (15 January 2010, Handelsblatt)
- CeBIT: Was erwartet die ITK-Welt (14 January 2010, Silicon)
- Gartner: Handys überholen Computer bis 2013 beim Internetzugang (14 January 2010, ZDNet)
- Warum Unternehmen twittern müssen (14 January 2010, Handelsblatt)
- Wie Outsourcing von Software-Tests funktioniert (13 January 2010, CIO)
- IT und Telekommunikations- Trends 2010 (13 January 2010, Bitkom)

Since November, we have launched into a competition process to find a mobile operator. For the past 4 years we have been with SFR and have reached the end of the contract period, and we have put them back into competition with other operators. This is the rule of our (certified) procurement process.

We have just retained Orange at the conclusion of a selection phase on the basis of propositions followed by a phase of exclusive negotiations. To start this consultation, I worked with Mejdouline to analyze our practices and to determine what the profiles of our users are. We have 3 major categories: great nomads (x2), nomads (x4) and non-operating users (x16). This last category, even if it represents 3/4 of the fleet, is an insignificant part of the budget. We thus concentrated on the analysis and the needs of the other two categories.

The categories of nomad users generally request roaming of voice and data and this is increasing constantly. The nomads are demanding more access to data (3G key). We therefore focused our needs on roaming and on the generalization of dual data access (computer + mobile phone). It is on these expenses that we have concentrated the greater part of our efforts.

Then we had to answer the question “iPhone or no iPhone? It is true that we can wonder about its autonomy, its fragility and its security level. But in comparing the other terminals presently available, the answer is clear. Symbian is late. Windows Phone is too early, as is Android. The only alternative was the BlackBerry but it does not reach the level of user friendliness of the iPhone. For the past 6 months, I have personally used an iPhone that allowed me to validate its integration into a Pentalog environment. I really have not been disappointed with its user friendliness, its speed, and its simplicity. The choice has thus been made, the entire population of nomads will be equipped with a 3GS 16GB iPhone.

Previously, the terminals were managed by the Administrative & Financial Service. We had already agreed that this team would continue the management of the terminals at the time of the change-over in the contract. These terminals are now managed just like computers are (inventory, configuration management, emergency stock). We are presently defining the operational procedures of the iPhone as Romania and the Republic of Moldova are already equipped with iPhones. Users will not be able to do what they want with their iPhones. We will deploy profiles on the iPhone to manage their configurations (list of Branches wifi access points, mail settings…). Even if management tools have not yet reached a very satisfactory level, we found the management of the profiles has reached the minimum of our expectations.

With the same activities, we reduced our budget by approximately 9%. The simulation of roaming voice traffic over the past few months applying Orange tariffs showed a reduction of 10%. As we become better equipped to follow our consumption data, we estimate the budget reduction will be approximately 400%. It is this sector that we will realize the most important part of our savings. In any case, we will organize ourselves to monitor our consumption, to better manage our budget where the options of automatic adaptation of the offer do not exist.

I still would like to make the observation that Orange did not come to us and propose a global offer. Has Globalization not yet arrived here? Indeed, wherever we operate (Romania, Moldova) Orange is already our mobile solution provider. It is in and around these countries that we do the most roaming. Orange is not able to operate networks to offer a global solution. In order to limit the impact of this lack of service, we will set up our own VPN with our Centrex which already covers France and Romania. Other countries will follow. An iPhone application is already under consideration right now.

For their part SFR only updated the offer we had on our fleet without taking into account the actual evolution of our needs. Too bad, because the competition was completely open.

In conclusion, Orange has done what it took to answer our main concerns. Until 2001, we were 100% FT and for the last 4 years we were almost 0% Orange. There are still some analog lines (fax, backup…). But our needs have been understood by Orange and they have provided the products adapted to these needs.

Various Pentalog committee leaders were very busy during the month of December 2009 because 3 of the 4 general committees were held: an Extraordinary General Meeting, a Board of Directors and Presiding Committee, finally only the Steering Committee, exceptionally, did not meet.

Amongst the many subjects discussed, many were focused (but not exclusively) on the potential roles of research and investment in the future. We have endorsed a policy which I previously mentioned… incubation, and its link to R & D and financial resources followed by the necessary human resources.

In 2009 Pentalog’s sales clearly rose above the EUR 10M mark to 13.5 M. But more importantly, we were able to generate profits which would more typically be found in companies 2 or 3 times larger than Pentalog. We must use these profits wisely, without wasting them.

The advantage of being nearly 40 years old (or soon to be), including 16 years as an entrepreneur, is that the mistakes one usually makes generally at 20 to 30 have already been made. If the volume of our profits gives us a means to act, we must ensure the return on investment for the company that generated this profit, that is to say, Pentalog. In order to do this, our efforts in R & D must be related either to the activities of Pentalog or those of its customers. But definitely this leverage must be used directly and MANDATORILY in the core business elements of the group.

For more than 10 years Pentalog has been working on developing its competence in marketing and its development is based on this. It is natural to continue in this manner. The group, along with PeopleCentric and with the help of Pentalog Labs (currently being constituted), and the Technical Management, will therefore make an investment in professional social networks. Pentalog will start developing its own software in this sector. People Centric will progress in evaluating competence and career management. Our strategy is to combine these two elements together.

That’s not all. Pentalog will also move forward and invest in building a development monitoring platform, based on the actual performance of the development teams, which will enable them to be challenged on all levels but will also finally rationalize the dialogue with the client in regards to the evolution of service prices. It will no longer be necessary to tell a client that because of the inflation in wages, we are obliged to request a price increase. I’ll tell him that now, thanks to our efforts in education and project management, in all sectors, we are able to present a substantial gain in productivity. This investment is probably the most crucial for our future.

Finally, the various committees endorsed the launching of a policy of external incubation (PeopleCentric-type ) using, in addition, the leverage of investment in engineering capital and in management. One of these first companies could emerge in the coming weeks…

It remains lastly for me to wish everyone a happier year 2010, more fun, more prosperous, better than 2009!

- 2010 tech forecasts: What the accurate analysts predict (05 January 2010, Infoworld)
- Global outsourcing: IT service providers will reach for the cloud in 2010 (06 January 2010, CIO)
- Russian Recovery! Pausing to Examine Indicators (06 January2010, Pravda)
- IT Outsourcing: Avoid Multi-Sourcing’s Costly Trap (07 January 2010, CIO)
- Firms under pressure from software audits (08 January 2010, IT News)
- Cost Saving for IT Infrastructure Management (11 January 2010, CIO)
- China’s Economy Facing Risks, Warn Officials (05 January 2010, Business Week)
- Wall Street Beat: Year Starts on Optimistic Note for IT (07 January 2010, CIO)
- Outsourcing vendors ‘will use IT to innovate’ (08 January 2010, BCS)
- Wo die Analysten irrten: Die 3 Forrester-Sicherheitstrends 2010 (11 January 2010, CIO)
- Hightech-Industrie 2010 auf Wachstumskurs (05 January 2010, Silicon)
- Frankreich: 60 Millionen Euro für die Online-Presse (05 January 2010, Heise)

I read an excellent article in December, in 01 Informatique on the up coming revolution in IT. I also have been giving this considerable thought lately.

Indeed, it has been a long time that I have no longer believed in the traditional model of IT service companies which have a business based on Time & Material contracts only. Except for some specific areas, extremely demanding, or very secure, customers no longer want this. In Pentalog, only approximately 10% of the staff is still working with this antiquated system and this represents only 17% of our sales. The French IT services, as a business model, are primarily a result of… the French labor code.

But beyond our own convictions, which have been developed over time and in accordance with our strategic plans, the world of IT is now ONLY talking of industrialization. The small and medium size players, the intellectually lazy, and the cohorts of those who do not know how and or do not want to invest, see their profit margins shrivel, and many of these companies may be excluded from this market. Over the past two years many have started to make changes, and there are many who still remain, but the timetable for change has become smaller, as well as the financial resources necessary to take action.

This important revolution is not yet complete, and another one is coming which will not pull any punches and could create other problems which could touch system infrastructure services also and thus eliminate entire pages of purchase orders for IT services companies and integrators. I am talking about the Cloud, SAAS and with their numerous derivatives.

What indeed are the niches that are threatened? The integration costs will suffer large reductions, which could reach 60%, and the same for development. Many companies will not dare taking the next step. It is not essentially a financial problem, but one which will rather demand an intellectual effort to resolve. Indeed if SAAS is essentially a matter of mutualization, Cloud Computing means literally virtualization in the strictest sense of the meaning. Many companies will find it difficult to offer support and advice to their clients with all the newcomers who are not like the older players. Whole sectors of the IT organization could be revolutionized. I think especially in CRM and obtaining new customers. The disappearance of intermediaries is close at hand. This cornerstone, the concept of distribution is about to change. The sale of software will level out too, between producers and customers. The added value will therefore have to be based on higher level services.

Pentalog has a dozen or more software editors in its client base; how can we help them through this new ordeal, after having helped them to overcome the pitfalls of outsourcing and offshore? We have provided them with quality production which has met the industry standards and our cost controls have been streamlined. Many of our customers now have industrialized processes. We plan to go much further. We’ve also already started during the past two years, to accompany them on the SAAS area (Coronis Systems, People Centric, Lowendal…). But perhaps there is also a place for business model-oriented consulting, to support the selection mode of distribution based on a Cloud system, or using the Pentalog Cloud system, driven by the technical services that have already been tested and validated, and based on quality indicators adapted for these new services?

For these reasons, and to meet all these new challenges we have restructured our business line offers, with embbed computing on one side and other connected IT on the other side. Pierre, as head of the Information Systems business line must help his editor-clients, who are also service providers, to meet these new challenges.

The article I read beautifully put into perspective the dual challenge for IT services firms, which have not yet passed the industrialization stage and the need for internationalization of production. I have been thinking about it for some time. I believe even, that this article does not stress strongly enough that these two subjects coexist, being a part of the same problem. All those who have not yet responded to any of these two issues are likely to suffer a lot in the coming months and or at least see their margins continue to drop.

- Facebook,Twitter to be platforms of choice for hackers (29 December 2009, CIOL)
- Twitter buys into geolocation (30 December 2009, IT News)
- 10 predictions for video conferencing solutions in 2010 (04 January 2010)
- Emerging markets and recession: Counting their blessings (30 December 2009, The Economist)
- Five technology trends for 2010 (30 December 2009, CIOL)
- Was soziale Netzwerke über uns verraten (28 December 2009, Handelsblatt)
- Die 7 Outsourcing Todsünden (29 December 2009, CIO)
- Die Treiber des IT-Markts: Mehr Übernahmen von IT-Dienstleistern (04 January 2010, CIO)
- Frankreich: Umstrittenes Filesharing-Gesetz in Kraft (04 January 2010, Computerwoche)
- IT-Projekte neu ausrichten: 7 Erwartungen des Managements an die IT (05 January 2010, CIO)

- 10 Outsourcing Trends to Watch in 2010 (17 December 2009, Outsourcing Russia)
- 6 Offshore Outsourcing Hot Spots for 2010 (22 December 2009, CIO)
- Tunisian economy resists world financial and economic crisis (26 December 2009, Tunis-Afrique Presse)
- India helps Mongolia in IT outsourcing (28 December 2009, CIOL)
- Five big questions about cloud computing (22 December 2009, InfoWorld)
- Today Linux is no more an option, it is a necessity (24 December 2009, CIOL)
- The top underreported tech stories of 2009 (28 December 2009, InfoWorld)
- IT-Krise war gar nicht so schlimm (22 December 2009, Netzeitung)
- Datensicherheit, Nutzen, Offhoring: Outsourcing-Projekte in Deutschland (22 December 2009, CIO)
- Deutsche und Inder forschen zusammen (23 December 2009, Silicon)
- Offshoring soll wachsen: Die Outsourcing-Trends 2010 (23 December 2009, CIO)
- Ausblick 2010: neue Chancen und Aufgaben der IT (28 December 2009, ZDNet)

- What CIOs Get Wrong About Emerging Technology (18 December 2009, CIO)
- Sun Microsystems unveils advanced cloud security tools (18 December 2009, CIOL)
- While Twitter gets the press, Germany is now a Facebook stronghold (17 December 2009, Techcrunch)
- Q&A: IDC Forecast for Management 2009 (17 December 2009, CIO)
- How Open-Source Software Can Affect A Company’s Value (17 December 2009, CIO)
- UK aerospace outsourcing (14 December 2009, The Manufacturer)
- Mittelstands-IT: Vom Unterstützer zum Gestalter (15 December 2009, Silicon)
- Lünendonk: Dienstleistungen werden immer komplexer (17 December 2009, Silicon)
- Twitter spricht jetzt auch Deutsch (17 December 2009, Computerwoche)
- Währungen: Das Vertrauen in den Euro bröckelt (18 December 2009, Welt)

December 08, in Iasi (Romania), December 09 in Bucharest and finally on the 15th of December in Orleans AFNOR auditors in charge of monitoring our ISO9001-2008 certification, which we acquired last year, came to make their first monitoring audit.

Development projects (our biggest one and 3 smaller ones), the Human resources process, Technical assistance services and facilities management but also the transversal processes (IS, sales ,..) were scrutinized. The findings were direct and unambiguous: 7 strong points, 0 sensitive issues, 0 non-compliance, and 4 process improvement tracks.

These results are very encouraging concerning our approach to quality. Our improvement loops (PDCA) will continue to monitor our development program to approach CMMI level 3.

This could not have been possible without the effort of everyone involved in executing the processes but also those who were audited and those who helped in the preparation. I would also like to note another key to this success: Aleth and her strong personal investment in her function as quality director.

The next set of guidelines has already been launched. I will soon write another note on a topic which I hold close to my heart: Change management and the training we will provide to Pentalog managers on this topic.

During my trip to Hanoi, to set up with Iulia a development team for the ISD, I took the opportunity to visit a new “open”� Datacenter. As I explained in a previous post, our network strategy is to deploy a regional strategic point in an open Datacenter to have greater flexibility.

Indeed, we have to consider that a growing branch will expand every 12 to 16 months. This expansion implies moving. If we were obliged to move systematically the international links, it would increase significantly the budget of the expansion. The strategy is to “freeze” the international linkages that allow us to control our quality service throughout. Then, the links between the data center and regional branches are more accessible and less expensive to move.

In preparation for a potential opening of a second branch in Vietnam (Da Nang, Hue or Ho Chi Minh City) I went to visit this Datacenter on the outskirts of Hanoi and close to our branch office. I have already had the opportunity to visit several data centers in France and Romania. But I confess that I was impressed by the level of this one:

- External and internal access control 24H/day
- Video surveillance circuit of 70 cameras
- Double power supply but only one national provider
- Double generator set with 72 hours of autonomy
- Double UPS circuit with 20 min of autonomy
- Operator hosting room (currently 6)
- Bay hosting space of 500 m²
- Additional services: data recovery room, rollout room…

I was very impressed by the services made redundant, as well as the environmental quality and technical skills of the interlocutors. There are not many hosting possibilities available at this level in Hanoi, certainly a bit more in Ho Chi Minh City.

The strength of this type of this hosting service is the presence of many operators who will be able to ensure the necessary interconnections. For that provider it is still low. Most rely mostly on the capacity of NTT (the historical Japanese operator) who have invested also in the Datacenter sector.

Our project is progressing. It will be achieved when we have completed our search for international operators and we have sufficient bandwidth for our services. We also need to negotiate the best rates possible and therefore we are playing the game of competition between the different operators.

Prices are changing rapidly. We are presently negotiating with our two current operators to double our bandwidth for the same rate.

The new version of our catalog has been out since last October.

- Euro version
- Dollar version

Pentalog is the only company to offer a catalog of its ongoing services in euros and dollars, updated 2 times per year.

Find nearly 130 services, available locally or offshore: developing information systems, business intelligence services, embedded systems, infrastructure, networking, telecom, outsourcing, hosting, BPO – business process outsourcing, …

Download it, save it and distribute it around you!

I just returned from a 2 weeks trip to our Hanoi office with Iulia, the head of the software team of our IS department, where we established a new development team for the Pentalog information system. Frederic has already discussed this project in past blogs, I would like to give you a few extra details.

We have reached the third stage in the cycle of our information system. For each of these steps we PRIORITIZE the means & resources as follows:

1. Implementation: Infrastructure, Applications, and Service
2. Development: Applications, Infrastructure, and Service
3. Maturity: Services, Applications, and Infrastructure

This translates in fact into the following:
• The establishment of a more detailed data collection service that the ISD will put at the disposial of its users.
• Better communication services through newsletters.
• Paying more attention to our users by adding new communication channels including satisfaction surveys (4 per year).
• The establishment of skilled professional committees dedicated to monitoring internal projects and a strategic steering committee.
• The deployment of a permanent team for software department.

We arrived at this information system, first with temporary resources (bench time, incubator…). Only maintenance and the software helpdesk were given permanent resources. With our continued growth and the opportunities it has brought, it was time to improve and professionalize the software department. Since this summer and with the confirmation of Iulia to this position we launched this project to establish a development team in our Hanoi branch.

In 2010 the team with will have gone through 3 stages of development. We finished the first stage with the deployment of a team composed of:
- Cuang, the team leader
- Hieu, the .Net developer
- Nhu, the tester
- Quang, the PHP developer
- Yoann, the BPM developer

Eventually the team will need to increase to 10 or more people in order to meet our growing needs for our internal / external communication tools, tools related to management (production, finance) and our production (improvement of the eco-system of the development environment). The help-desk software, business intelligence cell and management will remain in Europe.

The direct consequence of this change is the working language will pass from French to English. So gradually the content of our documents, in the wikis and other tools will gradually switch to English. However, Yoann will represent the French speaking people in this team.

As with all outsourcing projects, we dedicated these past 2 weeks in Hanoi training the team in our practices, needs and their evaluation. After a few days back home, I must confess that I am not disappointed with the way it was conducted nor the level of the people we recruited. Through Cuong, Hieu Nhu Quang and Yoann, we have a solid foundation which will enable us maintain the right balance between the ISD and the company’s objectives.
It is with all the experience that we have gained in past projects for our clients that we can now deploy this project. The pitfalls are well known:

• Communication: it exists through technical discussions, weekly follow-up meetings and a monthly steering committee.
• Proximity Management: Cuong, the team leader is responsible for meeting the demands and the quality deliveries and improving team performance.
• Human relations: we repeat this constantly to our customers, that these relationships are essential in order to maintain the team cohesion in the project despite the distance. Three or four times a year, Iulia and / or I will make on-site visits for an update of ongoing projects and new projects. It will also be necessary to maintain better visibility in the future.
• Mastering start-ups: everything that can be deployed at the beginning of the project will help development further down the road. So we deployed from the beginning, our development processes and maintenance (those applicable to the customers and certified ISO 9001-2008).
• Precise Methodology: our recent successes in the deployment of the agile method encouraged us to implement this methodology for this team. This will allow us to have a faster understanding of their needs.
• Monitoring individual performance: we are building a basic work unit for our technological environment. Producers and managers thus will have a benchmark to measure performance and the progress of everyone.

The recruitment for the second phase has already begun and it will be completed at the end of December. After the integration of these newcomers, we will begin the third phase after the Tet festival (feast & traditional family event, which is much awaited). Obviously, these recruitments have been orchestrated by People-Centric from their Hanoi branch. The process also worked there, and the results are there to prove it.

We could not complete this project without sharing a friendly dinner together. So we went to the “Highway 4 (exotic specialty restaurant) instead of the snake restaurant (Iulia promised to go there next time). We really had a good time around dishes of grasshoppers, shrimp and other delicious exotic dishes.

This team, under the responsibility of Iulia already knows that its production will help support the company in regards to meeting its objectives. The challenge is enormous but accessible!

- First the most incredible, 93% of the Pentalog job offers are accepted! I wasn’t aware of this fact and it really amazed me. People Centric, I would like to thank you for the quality of your targeting. However, we would like it even better in particular in the industrial and embedded sectors.
- 73% of the commercial offers sent by Pentalog in 2009 to new clients were accepted… but this figure is declining. In the past few months, we are below 60%. Is this an effect of the crisis or because of the change in our organization? This issue is being studied.

- 90% of the tenders sent to our existing clients are accepted… Confidence is high!

- The overall satisfaction of our clients (as expressed by the surveys) is: 78% (our target was 70%). It is obvious that the propensity to express one-self is stronger when the opinion is negative, but this is the name of the game. Most of the surveys conducted by IT companies indicate results ranging from 60 to 80%. But it rarely goes beyond this figure. But we will probably soon see an improvement and reach our objective.
- The quality of our customer relationship is very high: 87%! This sub indicator shows the overall satisfaction!
- 8 customer complaints since the 1st of January. Less than one per month. 4 came from 2 customers, and for entirely different reasons. For one, it was the structure and organization of the team and the other one because of the difficulty Pentalog had to follow a much smaller operation than others. Anyway… We need to identify and eliminate them. But 8 claims for more than 100 missions and projects and 400 employees, we are already seeing the first results of our quality plan. We will continue to monitor and make further improvements!
- Pentalog employees spent more than 3500 days in training, more than 10 days per person (I think that our annual average is 320). This figure also surprised me. I knew it was high, but not to this point. We have reached 120% of our objective!

These figures come from the management meeting we held yesterday for 3 sites in the world (Orleans, Brasov and Hanoi). Some indicate a need for improvement. We are extremely behind in our goal to hold annual interviews with our employees. Similarly, in calculating the level of customer satisfaction, the sub-indicators for commercial follow-up definitely need to be improved. It is a fact of our business model. But we’re working on it!

Here is an article written by Pierre Peutin, Head of IS Business Line.

As Sophie mentioned in her post of October 19, Pentalog was nominated for The Innovation Awards 2009 with MONA a virtual assistant solution. (http://www.youtube.com/watch?v=6aAbboKgdwE – in French). Here is a summary of the evening that was placed under the sign of the cinema, where the star that evening was innovation!

The ceremony for the Trophies took place in the Cinémathèque Française de Paris. After a lengthy introduction by Barbara Dalibard, Executive Director of Orange Business Services, and Jean Mounet, President of Syntec Informatique, we attended a screening of 6 short films, each illustrating the use of one of the 6 winners of the solutions evening. Each winner was awarded a trophy and had the opportunity to present their solution.

There were 6 categories for the 2009 session of the competition which brought together the final solutions adopted. These categories related to new uses, business solutions, mobility solutions / solutions technology, performance and operational excellence, applications and APIs inside the Grand Jury Prize. Emphasis was placed on rapid mobility solutions, solutions that are eco-responsible and of course, solutions for which an initial feedback was measurable, otherwise, innovation has no interest.

Pentalog competed with MONA in category “Performance and operational excellence.” Our solution was still in testing phase at the time of the nominations last June and was not selected but it was still distinguished amongst the 40 finalists (16 were selected for the award ceremony).

Let’s make a rendezvous for next year, presuming that this time Pentalog will be a winner!

I spent all of last weekend-end and the beginning of this week with the client-actors of our biggest platform project in Iasi and Chisinau. This project is a challenge that our two companies have chosen to face together. Its volume classifies it in the heavy weight category; but the schedule requires the speed and footwork of a bantamweight. To maintain this type of agility and a high level of performance, we divided the project amongst the 3 cities of Hanoi, Iasi and Chisinau. What is extraordinary is that it was the European sites that gave the reassurance to our clients, but it was the Vietnamese price that weighed into the balance and allowed us to out perform our competitors. In other words, we indeed needed a Euro / Asian proposition. Today the 3 cities and 6 teams are moving at very similar and at a high satisfactory rate… with a bit more for Hanoi.

Jacques, the technical director, visited the 3 production sites, and confirmed his choice and has increased his solicitation even more so. We will soon therefore be 50 in a few days.

I am speaking to you today, but also to all the Pentalog employees who have the honor to be involved in this relationship of trust, and finally to all those who, at one time or another have been involved in similar project like this. I want to tell you that this type of challenge is not possible without the commitment of each one, customers and suppliers in a true merger of fertile talent, courage and rigor. These are the projects which forge a sense of responsibility and professionalism… and which also form many new friendships. The Pentalog employees have come through 100% and also those of Strator.

We are doing something big and we will succeed! Thank you all!

Our client, designs, develops and produces products in France for the distribution of digital television programming and Video on Demand (VoD) which is then exported around the world, including areas of high $ correlation. The downward trend of the greenback in recent months has strongly encouraged the company to consider, in choosing its partners, which take part in the production and or, even the engineering and quality control. So it was quite natural for our client to turn towards our Vietnam site in Hanoi.

However, a 100% turn towards the $ is not without risk either, because after all, even if it seems that reducing the U.S. budget deficit (a downward influence on a currency) is not for tomorrow, the situation is not brilliant either in Europe. A rebound of the greenback in the event of a geopolitical crisis should never be excluded. Our client is still delivering the bulk of its production in Europe and Pentalog coming on, in the case of a Vietnamese production, with about 50% of its cost determined in Euros and 50% in $, we agreed upon on a 50/50 exhange risk… making the risk virtually disappear. From a formal point of view, nothing easier, 50% of the bill is invoiced directly in $ and 50% in €.

But our client who liked this idea, did not want to just stay there and wished to see the price adjustment procedure to be equally as creative. Indeed, he hoped that the revision of our prices would not exceed the inflation rate in Vietnam. This obliged us to calculate our prices in Vietnamese Dong at the beginning of the contract. The new value is then calculated in € and $ and is limited to 10% maximum per year.
I think we must think about integrating this type of billing practice in our market offers and our .com.

- Deutschland: Konjunktur springt langsam wieder an (15 October 2009, DiePresse.com)
- Outsourcing: Krise nährt die Krise (15 October 2009, Computer Reseller News)
- IT-Service-Unternehmen rechnen mit einstelligem Marktwachstum (15 October 2009, Silicon.de)
- YouTube Monetizing Over A Billion Video Views A Week (15 October 2009, TechCrunch)
- SocGen to Increase IT Offshoring in India (14 October 2009, BusinessWeek)
- America’s 200 Best Small Companies Of 2009 (14 October 2009, Forbes)
- China and India Business Grows as Border Dispute Flares (14 October 2009, BusinessWeek)
- Studie: Weniger Outsourcing in Deutschland (12 October 2009, Computer Reseller News)
- Indian Outsourcing Companies Look for New Markets (12 October 2009, BusinessWeek)
- Agile Softwareentwicklung- Mehr Erfolg durch Flexibilität (12 October 2009, Computerwoche)
- Third party maintenance contracts on the rise (12 October 2009, Offshoring Times)

3 moving announcements and an extension this week. Who can ask for better?

- In Iasi, in eastern Romania, we have no less than doubled the size of our unit there, which will soon reach 800M2 in the most beautiful building in the downtown area. Iasi is now spearheading Pentalog in Eastern Europe and is already home to the developments that we are undertaking for LHS Ericsson (Frankfurt), Juwi MacMillan (Hannover), but also for those of Nordnet (Orange Group, Lille) , Mousset (food logistics, near La Roche sur Yon). The branch, which opened in August 2007, is already at its third address in the Moldovan capital of Romania.

- In Bucharest, due to the growth of the team involved with our client, ST-Ericsson, Pentalog has taken another 130 m2, bringing its total area in the Romanian capital to 350 m2. We now occupy an entire floor in the Diplomat complex on Sevastopol street. We therefore will retain the 1ha park that the whole world envies. This could follow with a beautiful commercial announcement in the coming weeks.

- In Hanoi. We just signed for an additional 350 m2 adding to our one hundred meters in our current location. The 200 m2 where we first began, no longer could accommodate the 3 projects we are launching in the coming weeks. Do you remember, a few weeks ago, I was talking about two or three new projects … but last night I received a call from a new client who told me he had chosen our Hanoi site for the industrial testing of his product line (I will soon talk about this). In other words, the site of Hanoi will keep its promises in the first year … frankly it’s nice, especially with a new opportunity, albeit a small one, has just appeared and my little finger tells me…

In all, that makes how many m2 in management anyway? More than 4600m2, in 8 cities, 600 on the average, ½ hectare! It was worth a few negotiations, n’est-ce pas? In Hanoi, we passed from $ 18 to 10 per m2. In Iasi, we gained 20% while improving on the quality. In Bucharest, we earned a small euro, or 5.5%. Remember that a Euro saved is about € 7 gained per employee invoiced and per month. We, therefore are talking about € 30 000 per year for the group, 2% of the operating margin… for a small Euro of negotiation. In Hanoi, we won 5 and Iasi 2! We also renegotiated our lease in Chisinau and economized 11% in the Moldovan capital.

Congratulations to the Branch Office Managers for the quality of these operations that have provide us with better working conditions while enhancing our profitability.

We had fallen behind in the release of this indicator. It is now available again with some modifications.

Here are the following Average Daily Rates for each of the countries in which we work. We have made a distinction between Bucharest – offshore, and the division of technical assistance to local clients.

France: EUR 460
Prices are progressing. This is logical since we have reinforced our team of project managers whose services are invoiced at a higher rate than that of technical assistance services. However this indicator hides many un-invoiced days. We have not yet completed the total invoiced cost for these profiles. Nor has their work schedule been lightened yet; they are regularly solicited, almost daily, for project evaluations for clients or prospective clients.

Romania: EUR 175
This figure is just a little below the price of our catalogue for dedicated teams (EUR 180) and so it still remains a competitive price.

Moldova: EUR 137
Our lowest ADR in Europe which also takes into account a few BPO services. These services are invoiced at around EUR 110 / day, lower than the Average Daily Rate.

Vietnam: EUR 91
This ADR is well within the range that was anticipated; this rate is for the moment entirely composed of the development of information systems. With new projects expected to arrive shortly (especially in the BPO industry), we should see these rates lower slightly in the coming months.

Romania – Local Clients: EUR 256
This is the average fee charged for technical assistance to local Romanians clients. It integrates an average rate for technical and functional experts, as well as for junior developers in the more conventional technologies.

The next indicator will be proposed towards the end of October and thus it will focus more on the rates of the 3rd quarter.

Yesterday evening I was at the inauguration of Nekoe. Nekoe has been established as a “center of excellence” in innovation for the service industries in Orleans. Pentalog had to be there for two reasons; first as a service company based in Orleans, and second, we were responsible for the development of the dynamic part of the website www.nekoe.fr, in partnership with Oxyneo who took charge of the graphics and SEO.

I would like to take this opportunity to thank Wilfrid at Orleans, and Ionut at Brasov, who invested so much time and effort to complete this web site on schedule, despite the rather short time limit given.

The current site, which is destined to be a community portal, is still in its early beginnings. By the end of the year the site should provide web networking tools, including management tools for project stakeholders in Nekoe.

We’ll talk about this when the time comes.

Why innovation in services, what does this mean? It’s easier if I give you an example. I want to get around town by bicycle. First solution, 1 buy a bike, Option 2, I rent a bike, (e.g. Vélo+ in Orleans) and thus I have innovation in a service industry.

For industries such as Michelin, IBM, and Lexmark, they have converted part of their industries into service industries: rental and maintenance of Michelin tires for example. The President of IBM France explained to those attending the conference that the company nearly died in 1993. At that time the mastodon was operating at 80% production and 20% in services. It had to reinvent itself under this pressure and now the proportions are reversed and this has saved the company.

This mutation is lagging in France, far behind other European countries, especially in the northern countries and the United States, where it is seen as a necessity. Today it is the service industries that are driving growth upward and are creating the jobs in France.

The aim of Nekoe is therefore, to develop innovative service industries in the region, but for a clearer picture visit the web site www.nekoe.fr. In particular you can watch the video of Charles Eric Lemaignen, president of the Orleans Agglomeration who will explain this all very well in 6 minutes.

For a company as innovative in the service industry as Pentalog, it is a chance to be close to such a dynamic and proactive pole. We will follow its development closely.

Nobody wants to say the word, especially over the past few days, but “recovery” is on the lips of everyone. It is really quite funny to listen to commentators this morning swoon over the economic tremors that are between 0.2 and 1% when we see the economies of developed countries are compressed or have collapsed from 3 % to 8% over the past year. A standard economic scenario, after a similar movement is called rather a movement of growth equal to recessionary forces. Personally, I am not going to let myself get carried away about this information. Just the contrary, I hesitate between two schemas, quite different from the general enthusiasm of most people.

I feel a lot closer to the scenarios advocated by real economic experts like Joseph Stieglitz and Mostapha Belkhayate. Both support my own conclusions … and we often have made the same analysis.

Stieglitz believes in the W model, in which the small current upturn is due to the effects of rebuilding stocks which were at a minimum. The current recovery cannot be maintained for long, because the scheduled end of the recovery plans which should be around 2011 and the explosion of the state debts, in turn will deflate the component “public sector” of the national GDP.

Belkhayate goes even further. He does not play with the food on his plate to see if we will have a recovery of U, l, I, j and why not in z, rather he tells us that there will be no recovery before 2015… It’s simple. He evokes the monetary tsunami that has not yet occurred but could knock the dollar (it is presently at a $ 1.45 for € 1 again, by the way … in a deafening silence in regards to last year). The debate on the € / $ parity has gradually disappeared and the risk of an explosion of the dollar has strengthened. Belkhayate is right, economists are afraid of reality.

What I like about these two economists, who operate in totally different spheres (Belkhayate is a manager) and his concepts are based on an historical analysis, together with an objective analysis of the moment … that most refuse to do, for fear of offending someone.

I believe they are right and that, over time, we will have the greatest difficulty in obtaining growth over 1% … which means that, for example, it will take some countries about 2 to 5 years to find the same level that they had at the beginning of the year … 2008!

This very long introduction is to say that, in the context of restructuring the economy to the level of 2008 which will take several years, the maneuverability of companies will be very small, low wages will evolve slightly (which then will be in the context of inflation). It is likely that the purchasing power will decline sharply during this period in North America and the UK, possibly slightly less in continental Europe. Companies will therefore have to look elsewhere than in the growth area to find new profits. If the recession ends and we move into a period of slow growth or even into a period of deflation, it will take 3 to 5 years, before we return to the golden age of cost cutting. It is only in this manner that companies will be able to generate new profits, needed to defend the growth of their market value. In a confidence crisis, in order to have a sustainable global demand, companies may in fact only respond by continuing a strategy of reducing operational costs. We will finally see the true level of productivity in the service companies at this time!

Pentalog knows and has observed this. Companies that did not make this choice, of offshore, have brutally changed their direction. When reading this article, put it in perspective with the organic growth of Pentalog in 2009 (which should approach 40%). In my opinion, this is only the beginning of a movement that will grow stronger in 2010. Thus we can conclude that from 2005 to 2008, we mainly faced a demand for an offshore capacity (because HR was inadequate in developed countries) and from 2009, the application of offshore IT will be essential in cost reduction.

Only offshorers who strategically are able to play on the scaled economies will benefit from this new wave.

My activities as of late have been a little hectic and this has perturbed my usual rhythm in keeping everyone posted. I would like to take this opportunity to bring everyone up to speed concerning the final decision of our client ST-Ericsson to entrust to us, for a reasonable period of time, several of its product platforms. This also gives me the opportunity to thank everyone and to talk about the worthy celebrations that we had because of this success in Sibiu… which closed this chapter of a long story, which started a year ago.

In May 2008, I received a phone call from Ausy inviting me to attend a meeting in Paris with one of their clients to discuss the porting offshore of a platform already outsourced in France. The subject, described in volumes and the technologies in question seemed highly motivating. Possible I had convinced them at this first meeting that Pentalog Technology was well prepared, and was ready to go even further…

From this time on started a cycle of successive validations, ultra short, where we had to explain how we were going to face a challenge of such magnitude: 33 hardware engineers, hardware layer, protocol, audio… platforms that would deliver complete low layers software to… the n ° 2 worldwide in mobile telephony. The customer dropped into Pentalog, twice in a very short time. We immediately understood that each visit was not just a social call: they wanted to know if we had the available human resources on the Romanian market first of all, then Pentalogs’ ability to establish, in a few months, what had been already established in France since several years. We understood that for each one of these concerns, we could not make a false step!!

When we were given the go ahead, at the beginning of July 2008, we were aware that this was only for a long period of evaluation (which would last one year), during which the process could
be reversed at any time since the French operation remained only partially in place (admittedly decreasing gradually). This spring was characterized by a massive effort to show our high technical level and finally confirm the job was finally ours as of the end of June.

I want to thank once again all the members of the team and their managers who have worked so hard to get us here, I know it was demanding, but this is a real project which demands excellence! Management was sometimes obliged to work with you as if you were professional athletes. Now it is over and the results are there. So thank you once again, and I am not forgetting our client who gave us the honor to compete in this unique challenge. And thank you Marc. But we must not forget that this victory is only going to last for a short time and we will continue to face many new challenges ahead.

I am posting a few photos of our weekend in Sibiu, in this huge and magnificent house that Ralu (Sibiu), found for us…

Monica and Virgil enjoying themselves

Marc and a few of the boys!!

From now on, included with our recruiting ads, we will use videos on our joblogs and on PeopleCentric (which is about to be launched in France) web sites. Most of the time it was just a video tour of the recruiting office, or a video of the project manager, and at other times, for particularly difficult operations, we ran specific recruiting videos e.g. Office Director, Project Director or Project Manager.

Our communication has always been very direct; it will now become a little more so. The other day in a meeting with Raluca (the boss of PeopleCentric), I told her that our relationship had become similar to that of the arms dealer and his preferred customer. There is indeed no doubt, this small Business has really become one of the key driving forces in Pentalogs’ success story.

This morning, I looked at what was going on in the Pentalog joblogs. I am actually very happy with the recruitment rate through this instrument which is very visible and accessible to all. I have not measured the results, but it is very high. I saw a post yesterday on Peoplecentric.ro concerning the recruitment of staff for Sibiu (Romania) which has been extremely difficult to fill, and this helps me illustrate my point here, although I know that everyone does not read Romanian.

We have, through Peoplecentric recruited approximately 70 people since the beginning of the year… roughly the planned figure. But the progression has slowed in part because of the economic slowdown. However, we are still betting that it will exceed 100 by the end of the year. Let’s be clear, the IT people who visit us are the key to the effectiveness of the Pentalog business process. One of these days I will go into this in more detail.

I propose to take a quick look at joblog.biz, which contains all the job offers for the Pentalog group, in English, regardless of the location of the job in the world…

Yesterday afternoon, Livia and I were with Frédéric Bedin, the President of Croissance Plus, also CEO of Public System, the No. 1 French company in Marketing and Communications, but this was far from being an event; I would just like to mention that we have been members since 2007.

We had a very interesting conversation about economic trends; we both agreed that more than just seeing business stop (thereby disrupting the service companies) was the lack of new business. After all, each project has an end, simply because it was well conceived, led, and that it had achieved its objectives. The name of the game in business is life, the ideas, entrepreneurs in general who are responsible for creating new things that define new needs that must be filled in turn. And presently, this is exactly what is not happening. It is as if the machine that created new things had stopped. Thus, ongoing business deals will follow their course but there are no new projects coming up to replace them.

We have had quite a lot of chance by signing two huge business deals in 2008 and in January 2009 which will allow us to have a good rate of growth through 2009. However, I must say that the trend Newbiz 2009 is particularly sluggish, even though we’ve still signed a few small contracts and had some other opportunities come our way.

In a period of slow economic growth where do we find our markets? In a mature market with a positive growth factor, extravagant means were used to create growth (external operations kick started by millions to launch commercial ventures that were often oversized), and did not exceed 10 to 20% growth rate. In 2009, we are now looking at negative sales figures.

Rightly so, we find ourselves in an environment which we have not known before or in terms of economic sector or in a geographic location but we are capitalizing on existing foundations or if you wish… existing technology.

We have 3 concrete possibilities that can allow us to realize 30% organic growth in 2009:

- Joint Ventures in France in new sectors for Pentalog (Pentalog Technology with the Ausy Group, which will generate between 150 and 200% growth this year)
- Pentalogs’ proposed production capacity in new markets e.g. Germany, will draw subsequent increases from 150 to 200% also.
- The alternative in Vietnam, where we have 3% of our product and with an enormous capacity for future growth.

Conversely, we realize only 10% of positive growth within the historical boundaries of Pentalog (which still remains one of the most important values of our company).

In the case of Frédéric Bedin, this other specialist in development the market that could defend their economy, is probably outside of France. In short, when it goes well, we should be looking for potential “niche” markets for future growth when we do not need them but can be exploited when nothing else is going as planned.

The IT Mag asked the following question, whether “the role of taxation” played a role in regards to establishing an offshore outlet? Is this a criterion or not?

Certainly, any business, when considering whether to invest in a new country inquires about the taxation practices in this new environment. On the other hand, is the question of moving offshore solely a function of taxation? NO! An enterprise establishes itself offshore because it is seeking a cost reduction of production or possibly because there is a lack of resources available locally, what I call “capacity offshore” (especially between 2005 and 2008).
In the case of Pentalog, in terms of taxation, we simply followed the logic of our investment needs. We had big needs in Romania, we focused on our results in this country, and it is the same for Vietnam or Moldova.

However, systematically, the results go back to France, far beyond the actual income generated by the French teams, it is simply because our associates are shareholders in a French company, that we must be able to pay dividends, but also for FINANCIAL SECURITY.
The article indeed has forgotten one important point, an offshore outlet because of being established abroad is also exposing themselves to risk because of the currency exchange (rupee / dollar…), and even banking risks (Ukraine, Russia).

I do not therefore believe that the corporate tax policy should dictate whether an enterprise should take the decision to go offshore. However, once the site is offshore, the question can be asked in regards to the future needs of investment, and where are the profits coming from. It’s very different. It would be stupid, in fact, to be established in Germany and under their taxation laws while making a capital increase in India, and while corporate profits are predominantly derived from that country.

I do not criticize foreign states on their policy of low taxation, when major Western states implement the Research Tax Credit system, another weapon used to allow fiscal dumping.
The article mentions that the real decision to go offshore comes from the cost of labor. Who can argue the contrary when the skill levels are the equivalent to ours? But the payroll, too, is indeed affected by the tax policies of the country. The rate of the tax burden (income tax + social security) is a direct driver when calculating gross wage levels. The higher the taxes, the higher the gross wage will be asked for in return. In other words, as an offshore operator, I’m much more attentive to the impact of fiscal policy on my production costs than on the taxation benefits of my group.

Some countries, including Romania and Moldova, have been eager to play in the global market of offshore companies; they established a system of total income-tax exemptions for offshore developers.

The expectations from this type of policy decision were twofold:

- Lowering the level of salary expectations related to the social charges

- Encouraging nationals to remain in the country, thanks to this tax benefit. I must say that the latter has had a positive effect of reducing the difference in purchasing power between the local people and their offshore colleagues from the west.

All stakeholders have benefited from this system. However, many of these countries, have become increasingly more indebted, and seeing their tax revenues melt like snow, have started to eye this tax haven, which promoted better paid professionals rather than paying the national average. As of 2010 this could well be the final year of such devices for excluding IT developers from being imposed. Companies in this context of economic crisis, may not be able compensate at the net, it is virtually certain. The purchasing power of an IT in emerging countries could, in this context, see their first year of decline since the beginning of this offshore movement.

Last night I had the opportunity to attend the Croissance Plus Dinner; what a great evening at L’Escale, on the banks of the Seine with the intervention of Claude Bebear.

Frédéric Bedin, President of Croissance Plus first remarked upon a recent article published yesterday in the Tribune “When Innovative Small-Middle (size) – Enterprises (SMEs) surf the crisis”. He tempered the enthusiasm of journalists. The study showed that 17% of these SMEs expect a decrease in their activity, and 44%, predicting stagnation. These figures are in fact well above the average, from the perspective of Croissance Plus they show deterioration.

The crisis also has affected the innovative enterprises but they are still more dynamic than others.

A note of real optimism came with the answer to the question “What do you think are the main assets of your company behind its strong growth?”

- Strategy: 33%

- Innovation in products and services: 32%

So enterprises are basically relying on their strengths and not on external parameters.

A strong desire to succeed is still there and that is a good sign.

Frédéric Bedin had invited Claude Bebear, A French Entrepreneur on the International scene to discuss and debate the theme of “loss of common sense + greed = crisis?”

A short glance at an historical event which took place in 1637 which led to the same type of crisis we are experiencing today… because of greed and the loss of common sense. This crisis was related to the Price of tulip bulbs (the price of tulip bulbs had been multiplied by 20 in 3 months until the price exceeded by 2 times the price of houses which led to a sudden market collapse) resembling curiously our current crisis.

Mr. Bébéar has taken to task the monetarist policy of the United States and laxity of governments’ vis-à-vis the banks.

He does not believe that the coming of Obama to the Presidency of USA will change anything: it is always the same advisors sharing the same mentality of Goldman Sax that counsel the President.

Also the inventors of complex financial products took a bruising from Mr. BeBear.

In short, whether in Europe or the United States, banks, shareholders, and the markets were left to be seduced by easy financial gain, (greed) that the authorities had allowed to develop in the face of common sense.

What then?

Abandoning the IFRS accounting system, establish once again safeguards for financial products, … but an idea that interested me the most in relation to what we are seeing presently in Pentalog is the fact we are rewarding the loyalty of shareholders.

This system exists a priori in Germany, where dividends are increased for older shareholders. This allows both to reward loyalty and to avoid the volatility of “short-term” investors.

We have a tendency to forget occasionally, that Pentalog realizes close to 2 million Euros from consulting, and that this represents 20% of our sales figures. However, over the past 2 years, as part of our decision to improve the quality within the company, the decision was taken for the first time to engage an outside consultant to assist us in reviewing the company’s performance, and this mission was entrusted to Pierre de Thélin. The results were good, even very good! I admit it was not easy to accept, but Pierre understood us. He managed to suggest the plan that we needed and in doing so became our friend. Today, he always accompanies us and makes trips from time to time to Romania and Moldova to train our project managers.

In 2009, we are tackling a new project, which I definitely want to see completed within the year. For this reason, we again called on specialists outside of Pentalog. We have chosen to be assisted by a firm which I regard as being one of the best in “web strategy”, in France. I have engaged the company, Group Reflect and Alexis Mons, as the director of strategy. I asked him to be our principal advisor and to lead the project. The implementation of this program will be later assigned to Pentalog teams.

The challenge of this project is strategically very important; the principal objective is to preserve the uniqueness of the Pentalog strategy that during the past 4 years created a rate of growth between 30% and 67%. Pentalog.com Version 2010 will be both the spine and the embodiment of the strategy which will be developed in the coming years.

Alexis is therefore presently working on integrating our strategic plan into different web interfaces. More than ever, we will seek to initiate an online sales procedure for complex software or infrastructure operations. But, more than ever, we wish to publish an online strategy and try to generate new financial or commercial partnerships, directly from the web interface. Furthermore we wish to give our future clients the possibility to directly interact with us even before we make “first” contact with them.

I want to do everything to preserve this state of emergency which generates both creativity and high efficiency. But the current Pentalog.com is no longer efficient enough for what we are asking of it. It has fulfilled its mission. But sadly we now are working faster than the website we built. Alexis’s mission is to ensure that we are once again overwhelmed, by the flow of business from the web.

A few days ago, I came across an article in the French It Mag commenting about the results of the Indian IT services companies which have been collapsing on a continuous basis since late 2007. Many of them have even registered losses. This information, except in the case of Satyam, still surprised me for the simple reason that the downward trend was even more staggering because these corporations had at one time posted incredibly high returns. Some have even shown 30% EBIT on hundreds of millions. The scarcity of customers in these times of crisis does not seem possible to explain totally this rapid fall.

I see several possibilities:

But anyway, the current drop is not consistent with the declining profits of U.S., Eastern and Western European companies, which share the same customer base. They are not in the process of undergoing a shift from +30% to -10! The most profitables-ones will go from 12% to a balanced financial statement and the worst performers will go from 3% to -5%. In short, the decline in profits will be limited to less than a dozen points.

It remains to be seen whether the dire predictions of this article will be confirmed or not, sweeping aside in the latter case the value of this short note.

Just a short explanation: a collaborator charged as opposed to a non-charged, is an employee directly involved in the production of a service charge, whether by way of commitment or performance. In the Pentalog vocabulary, rather they are called producers (technician, through engineering and up to project director).

Those not invoiced to the client, are all the others, whether they are accountants, in the marketing department, in the administrative system of Pentalog, director of Production, branch manager, and or the President.

I had a discussion on this subject, with an associate, a few weeks ago who expressed surprise that despite our speech about the efficiency of our organization, we have at Pentalog an “overhead” of 25% on sales while they turn around 21% (they have nearly 2000 employees).

Why then is Pentalog more expensive? In the two cases, we integrated all the costs, even to the CEO (marketing communications, management, office space, training etc.).

21% for the average invoice of a collaborator in this company is equal to 2000 Euros per month and for Pentalog 27% is equal to 1000 Euros.

Many smaller Parisian IT companies, spend 2500 Euros per month!

Everything depends on what we are talking about, because ultimately, the contribution of our overhead cost charged to the customer is less than 50% (in value) or 50 € / day: a trifle!
And at this price, the difference is that we have almost 100% of our staff in our offices and we have 60 people annually (between 15 and 20%) of our staff who are part of our in-house training programme and they contribute to reducing costs through payroll (with the trainee staff participating in the production).

After all, we have employees working in management, client relations, marketing in France and in Germany at the same costs of Western European countries. I believe that our “overhead” is 5 to 10% more effective since they allow us to be more profitable than other French SSII by 2 or 3 times, with a growth rate 10 times stronger, for a total cost of 2 times less in actual value.

I am going to be severe with my colleagues, but their gross profit margin, the only indicator they use, has seen its day! Yes, it is very simple to manipulate and allows easy incentives to commercial people but it is accompanied often by a total absence of financial management on the part of your non-invoiced revenues and here actually reside enormous reserves of possible savings if you are prepared to reduce the size of your commercial department and put into place a strategy based on e-business which is very much adapted to our business. No matter the efficiency of management there are dozens of decisions based solely on the gross profit margin which are made daily by sales people and branch managers.

Lets return to offshore business, I do not believe that overhead costs can be reduced significantly under 1000 Euros per month and per collaborator on a system that is maintaining itself between 100 and 500 collaborators, taking into account the growth and management of staff, and training. At the same time, even in this size of company, it is not acceptable to pay more than the price of an offshore services “entry level” for overheads only. I will say therefore that my “target” is not to exceed 900 Euros in 2009, and no one in the profession should go over 1300 Euros. I believe for 500 collaborators or more, this figure must be brought down to 700 Euros. At the present time I have not done the exact calculations to confirm this concept.

And for those who have not yet understood what I am saying, I will be even clearer! A small offshore company with local management where the manager has a payroll of 5000 Euros (I have not been mean here. If it is an expatriated person you will have to consider double or triple), plus one employee, plus an accountant, offices, and a telecommunications system…, and no representative in Western Europe, therefore no real commercial or marketing service, no training, and no quality supervision… and 10 collaborators to charge out with an overhead of approximately 1000 Euros minimum! If the manager is an expatriate you can go as high as 1500 Euros, even 2000 Euros for quality management and with little of the necessary internal services. Can you imagine how many small offshore companies like this exist? We have taken over one or two per year over the past few years, you can find them most anywhere in Romania, practically for free or at least for very little.

Pentalog has just launched a major web communication plan, first based on the achievements of the different versions of Pentalog.com. The current version 3.5, derived from the 3.0-one, was designed in 2004 and has generated sales amounting approximately € 15M. Moreover, as I was saying when we launched it, Pentalog.com is not a website but a marketing policy.

When we launched it, we used to have 10 years of experience in selling services and then sought to increase interaction between prospect buyers and the CVs of our employees (the key sale document within software engineering companies). Therefore, we had to increase the number of prospect buyers. Our commercial databases now exceed 20,000 email addresses of professionals in our industry. We later proceeded the same way with our recruitment ads and a database with CVs of developers (20,000 today). We were successful and we employed 90 people in 2007 and 130 in 2008. But we believe that our total capacity is of 700 recruitments, only for Romania!

Still, the web has changed and version 2.0 has gone through there. Older approaches were not obsolete, but they were no longer sufficient. It became necessary to find new things to attract and seduce. Thus, blogs have joined Pentalog.com, upgrading it to version 3.5 that we are currently using. The web policy of Pentalog was enriched with a galaxy of new tools: chat rooms, pentablog.fr, blog.biz, joblog.ro, joblog.vn, joblog.fr, jolog.biz, Peoplecentric.ro, tools.people-centric.ro. We should also add a much greater appeal to videos. The number of monthly visits has reached the honorable figure of 50,000, which still represents more than 1,600 visits per day, while we are not exactly talking about services for the general public!
The investment multiplier has worked perfectly, since we’ve gone from an annual sales figure of € 2 million to € 10 million, without an increase in sales force, or 400% in 5 years. The concept was worthwhile. The total investment for all versions, including People Centric, probably did not exceed € 150,000 for a 100-times higher sales figure. To this we must add the operating budget for version 3, which is € 150 000 / year, or 750 000 for the entire period. Investment + operation are 16 times lower than sales.

And I am not talking about performance in recruitment which, through a well-oiled process, allowing very precise targeting, allows the recruitment of 70% of the employees identified by our branch managers. Totaling all costs of the Pentalog structures (including myself), we reach a budget per employee that is 33 times lower than the average 60% in our industry, despite the cost of a powerful Datacenter, continuous training, trainees, branch openings and… a growth of 60% per year. Pentalog.com is the key of our global BM.

In August 2008, we announced our expansion plans. We have considered growth models, schedules… but now we need tools! Let’s go forward towards the Pentalog 2010 web concept!
This week one of our esteemed colleagues visited us and we have opened our heart to him to work together on this new concept. We want heavy stuff and multipliers again, although we are aware that this is getting more difficult than in 2004. He will help us leading this version change, to ensure consistency of design, to assess and prioritize ideas.

We want the 2010 version to take advantage of the following:

We will also launch two sites in addition to the existing Pentalog portal. The first-one will establish the shortest route to a decision to purchase IT services / consulting. The second will be completely dedicated to the JV creation strategy of our expansion plan “30-2013″.
The investment should be roughly compared to what has been done in 2004. However, the large appeal to videos could significantly increase the operating budget.

Stay tuned. We will tell you more by the end of June.

About Pentalog Vietnam, I already explained that we were looking for technical, industrial and commercial partners willing to share with a Pentalog joint-venture and management unit based in Hanoi, more consistent means that would allow to capitalize on a strong social branding in order to faster recruit the best people on the market. The purpose is to assert the position of a set of specialized companies, including all joint-venture subsidiaries of the Group, eveny using Pentalog’s management, recruitment and communication methods and tools. Because anyone who has been involved in the offshore business knows that the most difficult part is to BECOME a credible company.

It is what I propose to any company having a serious technological project in Vietnam. If you need more than 30 employees, if you have a REAL niche business and WANT an offshore subsidiary… then join the “Hanoi Pentalog Techno Park”. You will be supported by our management and recruitment teams, just like we did in Romania with the Ausy Group, and thanks to the generated economies of scale, your project may ensure the return on investment that you expect for your offshore investments.

I want to remind all those who are tempted by this type of offshore operation, that committed costs are often higher than the labour burden, especially during the first years, when the number of employees is still low while the needs for management and recruitment are really high. In fact, this is one of the main reasons why offshore location projects fail. I recently spoke to one of my clients who was surprised to find out that our overheads per employee were higher than EUR 1000/month. But the figure includes our “Talent Incubator” department, all business departments in France, Germany and Romania, the Quality Department, The Financial Department, the Technical Department, the Production Department and the Recruitment Department capable of recruiting over 100 people per year… This amount of EUR 1000 also simply corresponds to an expatriate who costs EUR 10 000/per month labour charges included (it is not the most expensive-one) for 10 collaborators in the first year (excluding accounting, recruitment services and even premises…). QED.

We are therefore launching a communication campaign targetting managing directors of software editing and engineering companies. If you are ready to launch out into one of the most promising areas in the world and your project requires more than 30 collaborators, then let’s do it together! Web 2.0 tools will also be part of this project as our partner research efforts will be developed on Viadeo, Linked-in and Xing… coming soon! However, I admit that the current period is definitely not favourable, but this gives you one more reason to adjust your costs and achieve economies of scale!

When we opened Pentalog Romania in January 2000, the local labor cost (total wage bill) was about 9 times lower than in France.

In January 2009, within all Romanian offices of the group, the ratio was 2 for the salary and 3 for the total wage bill (4 weeks of paid leave instead of 5, no RWD, rate differences here and there …). This fantastic catching up might frighten us or our customers, especially when we know that at the same time, the prices charged by companies have increased “only by” 100% in 10 years.

Well maybe not. In 2008 Pentalog recorded the highest profitability in its history, both in sales figure and equity capital. Let’s say that the EBIT of the group is approximately 12.5% and the return on equity is around 60%. The first figure interests me as a CEO, and the second figure interests me as the President of the Board of Directors. I would like to recall that within Pentalog nobody, including me, is paid based on dividends.

Nevertheless, a figure of 12.5% in 2008 is about 60% higher than the average of French companies in the sector. Among the big companies, hardly any, except Alten, reached these types of values in the previous years.

But how is this miracle, worthy of the philosopher’s stone, possible? By productivity. I’m not going to take the year 2000 for a reference because we were software publishers, but the year 2003 which marked the transformation of our Romanian team into a “service” team. Then we invoiced about 30% of the available working days. Our competitors, just ahead of us then, invoiced between 50 and 70%. The remainder was composed of overrun on packages, training of juniors, customer disputes on the performance of dedicated teams… In 2008, the invoicing rate at Pentalog … reached an average of 97% while the company recorded a growth in human resources of 66%, immediately leading to a growth with 67% of the sales figure. If that’s not productivity…

We have given this speech, against all odds, to all our collaborators and interlocutors and each time it has won because it is armed for global competition when the wind blows.

Here’s where I am getting: the wage of Romanian developers has increased with 300% during the last 10 years, while that of their counterparts in Western Europe increased with about 25 to 30%. Of course this fantastic catching up is slower now and is mainly based on the “net” component of the wage. Emerging nations are more and more reluctant to deploy levels of social protection and paid leaves that obviously make Western Europe countries more vulnerable.

I believe that the compensation levels will continue to grow in Eastern Europe and in all new IT nations, simply because the projects will come here … even when prices will overtake those in the West, simply because Romania (20 million inhabitants) trains nowadays as many IT engineers as France does, and because Vietnam trains twice as many for 80M people.

What about India or China? Due to the lack of workforce, the core (dev activity) of the western European IT industry will simply disappear. If France, Germany or the U.S. prefer to send their dear children to the schools of cinema, psycho-sociology or styling, it’s their problem. Each nation chooses its own destiny by this kind of choice.

Meanwhile, my reasoning silences the marshals and the old-fashioned persons who are against globalization because our companies have made 10 times more to fix global inequalities than their benevolent speeches campaigning one day for cooperation, but who do not even want these economies to have access to production. Especially that, according to the Syntec, we have contributed only with 3.5% to the French IT economy.

The Management of Pentalog has voted on February 27 several major trends for the evolution of its quality management system for 2009:

- Implementation of a multi-year training course for current and future project managers,

- Improvement of project processes by incorporating methodologies from the CMMI and ITIL repositories and by generalizing the use of fine metrics in project management,

- Development of tools for capitalization and knowledge sharing within P
entalog.

The training course for PM will comprise several stages:

- A basic 6-day course, developed in three times over two days, and meant to strengthen the basic knowledge on project management, especially planning, expense management, risk management, team management and customer management;

- Supplementary half-day or full-day modules meant to explore these general notions through more and more precise exercises, and delivered within 2 years following the basic course.
Four groups have already been identified, and the 1st session will take place with a pilot group (Molodovan Project leaders and managers) by the end of April, for completion by end of June 2009. Other sessions (Romanian and Vietnamese project managers) will follow a few weeks apart.

This training is a totally new effort in the history of Pentalog, since it involves in 2009, more than 40 people, or 240 days of training, and a training time of approximately 30 days. A training meant to strengthen our management and project monitoring capabilities, all the more indispensable that we may think that in this crisis period – for an indefinite period – only the best companies will manage to extricate themselves.

In parallel to this training plan, the project processes in our repository and our project management will be drawn up, thanks to a major work on design traceability (specifications related to development), risk management, tests and measures for project performance (CMMI, metric).

The fine decomposition of the time spent on development, but also on design and testing, in basic work units, specific to every technology project and skill level, will allow the adjustment of the ETC and the optimization of task planning in order to better control productivity and efficiency: more relevant and timely estimates, better compliance with the milestones, stricter control over differences, measurement of objectives achievement.

These metrics and the different project assessments that we have begun to implement, will also be used to build a database containing estimations, final data, statistics on errors, best practices and examples of what not to do, in order to capitalize our experience and improve our practices at all times. These data will directly benefit our customers in the context of estimates and Pilot projects.

The implementation of metrics has already begun in several large projects and will expand to all projects by the end of the first semester of 2009. The improvement of production processes is, in turn, planned for April-June 2009.

The recent fluctuations in the euro / dollar parity have significantly destabilized the number of companies exporting to other countries in the dollar area. Thus, Pentalog has decided to adapt to these constraints by offering companies to purchase their services directly in dollars, thus limiting the exchange difference between the client and the supplier.

This new catalogue edition with the 132 services offered by Pentalog particularly aims companies in the aviation, software, defense and pharmacy sectors. At the present time nobody knows exactly what will happen in this respect. However, most experts generally agree on two scenarios:

- the dollar backed up by a solid but slow return towards the American growth. The price target turns between 1.35 and 1.45 for 1 €

- the dollar collapsing under the sustainable pressure of a fiscal deficit and the high American unemployment rate of 10%. The price target of the proponents of this scenario turns between 1.55 and 1.75 for 1 €.

In both cases, this means a rise of the Euro compared to early 2009, which effectively means a loss of competitiveness for European productions for the Dollar area. It’s up to you, dear exporters, to tell us if you are interested!

For its part, Pentalog being present in two economies which under-perform the euro, including a purely dollar economy (Vietnam), already has the productive capacities that allow us to support this model.

But why? BUT WHY? After having tried to reduce the exposure of our production costs to the Euro zone (thanks to Moldova and Vietnam) and after having published our price catalog in Euros, we are now launching the USD version!

First, this is important in the field of offshore IT purchases for technology exporters to the US and Asia. This is part of ongoing requests from groups like EADS-Airbus, Sagem, but also start-up companies… And it is true that many providers do not dare charging in Euros and taking big risks of exchange losses between the purchase currency and the production currency. It will constitute a real differentiating factor in our sales and price policy. In concrete words, invoices may even be issued by our French company.

This is not an issue for us anymore. On the one hand because we already have ¼ of our collaborators based in the USD area (already 80 people in Moldova and Vietnam) and on the other hand because we are already used to dealing with multicurrency management.

We work on a daily basis with five currencies: Euro, Dollar, Romanian Leu, Moldovan Leu and Vietnamese Dong.

Moreover, it is a real opportunity for us to cut risks. This is where the paradox is and I will explain it. Who would have thought that, since the end of 2008, we would have had an interest in producing services in Romania, that are charged in USD? Who would have put $ 100 on this bet? Yet, there lied the winning couple! The dollar has been rising almost continuously for 6 months now while the Romanian Leu has been dropping, just like the Polish Zloty or Hungarian Forint.

I do not know yet what our volume of USD business will be and we may first limit that volume to a certain percentage of our monthly sales figure. Today I assert that it is a matter of balancing production capacities. I can sell in dollars a service produced in Romania, or even in France, because I am at the same time able to sell in Euros services produced in Vietnam.

Everything lies in compensation. All we need is a bit of cash to be able to choose when to change. That is what we’re already doing with our 5 currencies. Every day I am a bit more surprised to see how the offshore business has enriched our professional practices.

Many of you have already downloaded and enjoyed reading it. Now for those of you who only have little time, you can also get an insight into our price catalog on our corporate homepage: locations, services offered, case studies, etc. In addition, there now exists a USD and a EUR version.

A couple of days ago, I had the opportunity to give my opinion, at the highest level, on the issue of modernizing the compensation and the distribution of benefit in enterprises. These ideas do not represent a projection of what could be the future of compensation within Pentalog. They are designed to fight against the gloom and try to fill in some of the great inequalities between employers and employees. In 1930, Henry Ford believed that the difference between the top and the bottom of the compensation scale in an enterprise should not exceed a ratio of 20. Later, the consensus was permanently established at a value of 40. But in 2008, the rate commonly exceeded 100, or even 400 and in some rare cases even 1000.

I believe, as many people do, that this is not acceptable, even if I am already aware that personally I’m on the right side of this scale.

So what can we do, knowing it is essential for those who have requested my opinion that the interests of corporations and their shareholders be protected to the maximum? Indeed, altering the labor cost in times of crisis can be disastrous for the economy of a nation, which could lead to enterprises and funds leave its territory.

First, it is obvious to me that the dilemma I have just created contains a solution, which has always been the basis of my thinking and I always tried to apply it within Pentalog: employees should have access to corporate shareholding. Any contradiction between the benefit necessary to the investor and the income of the employee is solved when the employee himself becomes a shareholder and entrepreneur, along with his colleagues. For many reasons, it is not easy, because sometimes employees do not understand their interest and are more interested in immediate revenues.

This contradiction is at the heart of the French authorities thinking. How to bring more revenue knowing that we are experiencing a serious crisis and that many French might even lose their jobs.

For my part, I identify two potential, serious tracks that I will propose, as a short reflection (I am not a parliamentarian, each one with his job :

Here they are in order of importance and according to my personal philosophy:

1. Developing employee ownership by all the possible means (stock options, free shares, increase of capital, all means are good). For this, we need to exempt to the maximum these operations in order to increase their leverage effect and ensure that the exercise of options or free shares, by tax effect, won’t reduce the purchasing power. Anyway it is ultimately the only sustainable way to develop the employee capital through his work. Why not take advantage of the crisis to allow employees to acquire stock holding within the company? You may thing I’ve gone crazy, admit it! Yet, I hear daily about distribution of cash and assistance to companies. So why not help the employees to participate in the capital increase of their business when this is needed, through regional funds. I do not want to be naively optimistic about this because I believe the granting of options, and moreover of free shares, should concern people who respect the company, its values and its project. But why not define the criteria, under a collective agreement, incorporating loyalty, performance, collective involvement…

2. Sharing the value added, dear to our president of the Republic. I am not hostile and I hereby propose a method for potential development. Why not implement in enterprises, indicators batteries for the calculation of VA, which would then create a quarterly variable (since this is now the analysis period of all companies) to be paid with the payroll of the following month at the end of the quarter? Pentalog uses these types of systems for a large majority of the employees. They are implemented for most of them, with respect to individual and qualitative performance to date. Others are “awarded” based on a collective performance (Branch managers for example). The principle remains that these tools provide more above the agreed wage, which is a result of market and sector agreements in countries where it exists. Therefore, in this case, a variable is a true “plus” to compensation. It represents, depending on people, around 10% of gross wages within Pentalog (i.e. more than a 13th month and they are paid every 3 months.) Will we think about the variable on the overall VA of the company, or on its partial results, in addition to or as a replacement for current bonuses, predominantly productivity-oriented? In any case, I will put this idea on the table of ideas for the future. In France such a device could work together with the participation agreements, when they exist in the company. The principle is to define a compensation variable to payment almost immediately.

Finally, what prevents us from combining the two ideas, and allowing the employee to convert compensation elements (variable, time savings account …) into shares within the company? After all, there are moments in the life of a company where cash is scarce and everyone’s motivation is valuable. This may truly be an interesting weapon.

At Pentalog France we have more than 40% employee shareholders. Some people have between 5 and 10% of the capital, equivalent in value to several hundred thousand euros (about EUR 100 000 for 1%). However, there are not too many in Romania-Moldova, although we have made progress recently. But the culture “cash is king” has prevailed until now.
I’m still a supporter of corporate shareholding. I also think back to the time when I met investment funds, as prestigious as deplorable in imagination, and which recommended me to “stop it”.

Well ladies and gentlemen, please know that I intend to seriously re-open in 2009, if our plans come true as we planed a few months ago. Pentalog has made cash reserves before entering the typhoon and so far, we see no reason to change them.