In line with our commercial development strategy in the Asia-Pacific area, Pentalog will attend the 10th edition of the ASEAN forum organized by UbiFrance in Malaysia (Kuala Lumpur) between 27 and 30 November.

10th ASEAN Forum

Around fifty French companies will come together to share their experiences, best practices related to commercial development in the area in general and in each member state in particular. Moreover, many B2B appointments have been set with a view to encountering future clients/business partners.

If you are looking for a top-level partner in the field of IT services in the area, if you have a customer portfolio, but you lack production capacity, if you have a revolutionary idea, but you need an incubator to turn it into a concept, if you want to join our team or if you are just interested in Pentalog and you are in Kuala Lumpur in this period, feel free to contact me: tnguyenquoc@pentalog.fr.

Best articles of the week put together in the IT offshore press review. Don’t forget you can also meet us on Facebook!

- Google+ Gains on Facebook (September 23, 2011, Forbes)
- Software testing should be in partnership with third parties (September 22, 20111, Computer Weekly)
- Facebook tracks you online even after you log out (September 25, 2011, ZDNet)
- Six Crucial Tech Companies You’ve Never Heard Of (September 23, 2011, CIO)
- H-1B, B-1 Visa Scrutiny Threatens IT Outsourcing Providers (September 22, 2011, CIO)
- Deutsche Wirtschaft auf der Kippe (September 22, 2011, Financial Times Deutschland)
- 8 Beziehungstipps fürs Outsourcing (September 26, 2011, CIO)
- IT-Berater wollen zweistellig wachsen (September 23, 2011, Automotive IT)
- IT-Standort München: Wie sich Softwarehersteller behaupten (September 23, 2011, ZDNet)
- 25 gefährliche Programmierfehler (September 22, 2011, CIO)
- IT-Outsourcing gewinnt an Bedeutung (September 22, 2011, Silicon)
- Die IT-Wirtschaft plagt sich mit Nachwuchs-Sorgen (September 22, 2011, WinFuture)
- IT-Firmen haben keine Angst vor einer Flaute (September 20, 2011, Automotive IT)

Here’s my selection for today! Enjoy!

- Smart Grid Vendors Swim Upstream (September 01, 2011, Forbes)
- IT employment grows, but barely (September 02, 2011, Computerworld)
- Cloud computing and the public sector: What IT managers need from suppliers (August 30, 2011, Computerweekly)
- All-party MP group on outsourcing calls preliminary meeting to formulate proposals (September 25, 2011, Computerweekly)
- Global IT services plumbs 8-year low (September 05, 2011, ZDNet Asia)
- IT Outsourcing: What Big Companies Can Learn from Midsize Companies (September 02, 2011, CIO)
- CIO Alert: Five Cures for What Ails IT (September 01, 2011, CIO)
- Deutsche Wirtschaft stagniert (September 01, 2011, Nachrichten)
- Die 13 wichtigsten IT-Themen (September 05, 2011, CIO)
- 5 IT-Aufgaben für Energieversorger (September 02, 2011, CIO)
- LinkedIn toppt Facebook und Twitter (August 31, 2011, CIO)

Here’s the IT press review for this week!

- Air-cover: Innovation’s secret ingredient (August 29, 2011, Forbes)
- Google to shut down Slide social apps (August 26, 2011, Computerworld)
- Lack of soft skills training is curbing IT career progression (August 26, 2011, Computer Weekly)
- Organisations failing to implement hypervisor security, says cloud supplier (August 26, 2011, Computer Weekly)
- Gartner figures show BPO contracts on the rise with Asia Pacific suppliers in the lead (August 22, 2011, Computer Weekly)
- Chinese Android startup offers low-cost, high-spec handsets (August 29, 2011, ZDNet Asia)
- Should You Sue Your Offshore Outsourcing Provider? (August 26, 201, CIO)
- The 1st Annual Telematics Brazil & LATAM will Discuss the Way Forward for Telematics Market (August 26, 2011, M2M)
- Cloud-based infrastructure provides connections for M2M (August 29, 2011, M2M Now)
- Cloud wird die vorherrschende Disziplin (August 29, 2011, CIO)
- Die Hürden zum Enterprise 2.0 (August 26, 2011, CIO)
- Social-Media-Knigge für Arbeitgeber (August 29, 2011, Computerwoche)
- Der Mittelstand bleibt bei Unified Communications skeptisch (August 24, 2011, ZDNet)
- 10 junge IT-Firmen, die jeder Surfer kennen sollte (August 23, 2011, Netzwelt)

The boom in web models brings about great changes to the economic exchanges. They can provide purchasing services with a great potential for efficiency and with considerable strategic opportunities. However, the purchase of offshore services remains confined to an unadapted local information process, which is too much related to the purchase of local consulting services, due to national listing agreements. Nevertheless, the offshore sector includes numerous strategic methods for reducing the customers’ capex. The productivity of commercial departments of IT companies, which hasn’t changed over the last 20 years, affects prices and customer satisfaction. A few thoughts about it…

If I had time… oh, another post which begins with an incantation! So, if I had time, I would like to carry out a detailed study on the appropriateness of IT service purchasing models which are currently used in the European IT sector. Indeed, I am regularly surprised to notice that among our prospects who visit us, those who always pay the most for their trip and their stay are those who have a purchasing department, having listed providers for at least one year. At a time when the web is gaining in popularity and there are less and less intermediaries, and guaranteed income is called into question, this type of practice is absurd, as there are always promotions that their listed travel agencies do not offer them. Very often, they pay between twice to four times more than us for a trip that they bought on the same day from the same company. Whenever this happens, they protest against this waste, but this scenario is invariably repeated all over again. There is a typical tendency to avoid making fundamental changes.

In the offshore sector, internalization performed by the service provider reduces the clients’ capital expenditures and boosts R&D and maintenance operational expenses

The same thing happens when purchasing IS and offshore-nearshore R&D services. We regularly receive requests from major groups in the form of average daily rates for juniors or seniors, even though it is obvious that the offshore model cannot be reduced to the price of the manpower. They ask us for the average salary, the related local expenses and try to skip infrastructure costs… whereas the difference between Paris-based IT companies and their offshore counterparts lies in the location of work, the integration of security aspects, mass training, logistics, internalized staff management… Their way of thinking resembles that of commercial managers of local IT companies, i.e. from a gross margin perspective. In the offshore sector, internalization performed by the service provider reduces the clients’ capital expenditures and boosts R&D and maintenance operational expenses! At a time when the strategic criterion is execution speed, that makes all the difference. The purchase service, which has been formatted for several years, refuses to understand this and puts its internal clients at a disadvantage by excluding the true offshore pure players, the ones who make investment efforts. Offshore stakes are, in many cases, not known. In the US, where the offshore rate is estimated at around 40%, the first questions that you are asked pertain to intellectual property, the telecommunication platform and its security, the quality process etc. In short, the subject has been understood and I truly believe that there is work to be done within the purchase departments in the offshore sector. Excuse me for smiling at the thought of the numerous Moroccan and Indian offices (which may be a part of partnerships or not) of average French IT companies which are listed de facto because their mother company sells time and material services in Paris!

Paris listing agreements do not guarantee offshore-nearshore quality

In this case, listing agreements act de facto as intermediaries (a word which is hated by buyers), which, as with airplane tickets, should regularly go through the rich and renewed offer which appears worldwide. The web can thus play a role in reducing the number of commercial intermediaries just like it did in other sectors of activity. Generally speaking, clients understand the internationalization of purchases and global engineering better than IT companies. Therefore, they have much to gain from this. The clients’ security and purchase departments might want to visit the offshore resource suggested by their referenced partner. I remember seeing an offshore project of a major aircraft manufacturer in which 3 developers out of 10 worked during the evening for another company of the same sector. Of course, this small company benefitted from the listing agreement of a referenced French IT company. In Vietnam, I saw the team of developers of a major French company within one of the important players of the country, which is known to be working for the Vietnamese army… They worked on security programmes for European borders. Paris listing does not guarantee the quality of offshore-nearshore services. No more comments.

I am sure you have understood what I mean, despite the fact that I am biased. But the difference between these companies and ours is that at Pentalog, I am the one who makes a commitment, not a sales manager who has worked for 3 employers over the last 5 years! However, I haven’t finished my criticism. The last aspect does not concern the offshore sector in particular. It is rather general. The purchasing processes within IT companies have allowed clients to exert pressure on prices for quite a while. This is a fair fight and everyone has this aim, after all.

The productivity of sales managers in IT companies has virtually made no progress

Nevertheless, I am wondering about the impact on the commercial organization of IT companies which, in order to gain this much-coveted listing agreement and then support it, end up with expensive and excessively large sales teams. On average, major IT companies have one sales manager for every 20 employees, who represents 5% of the services sales figure. This is just the direct salary-related cost. The entire sales environment weighs between 20 and 30% of the sales figure of traditional IT services companies, with a level of technology-related capital expenditures close to 0. I think that here lies an important performance and productivity stake for all of us, both clients and providers, as this figure cannot be justified in a world where technical assistance amounts to more than 50% of invoices. Even though in comparison with the beginning of the 90s the demand has skyrocketed, the average sales achieved by a commercial employee of IT companies seem to be blocked under the 2-million-euro threshold, which, if my memory serves me right, is the same as the figure which was usually achieved when I began my career in ‘93! In other words, despite the volume effect and the contribution of new technologies, the productivity of a sales manager in an IT company has not improved. This represents a lack of creativity in the management of our sector.

The experiments that we have carried out at Pentalog and Invelia in terms of virtualization of commercial positions show that this figure can easily be tripled. Pentalog has only one sales manager for every 150 employees! Clients and providers in our industry might want to give this some thought. The cost of sales positions (25 to 30%) has a considerable impact on the purchasing price, quality, profitability and social satisfaction. At a time when the service purchase framework must be reviewed in order to better integrate an offshore component which will reach between 30% and 50% of committed man-hours, isn’t this an opportunity to ask ourselves a series of questions on the efficiency of our client-provider relations?

It’s a new week, it’s a new selection. Here’s the new IT press review! I hope you will enjoy it!

- Must-have data center utilities: Picks by IT pros (June 13, 2011, Computerworld)
- Java standards process to get an upgrade (June 13, 2011, Computerworld)
- Open Data Center Alliance publishes IT user requirements for cloud services (June 8, 2011, Computerweekly)
- IT services market back to healthy growth by 2013 (June 14, 2011, Computing)
- IT Value Is Dead. Long Live Business Value (June 12, 2011, CIO)
- How to Manage IT Spend (June 10, 2011, CIO)
- CEOs put block on cloud migration plans (June 13, 2011, IT Pro)
- Der deutsche Markt für Software und Services wächst wieder (June 9, 2011, CRN)
- Zehn Fragen zu Cloud Computing (June 10, 2011, Computerwoche)
- CIO-Jury: Passen Lizenzen zu Cloud und Virtualisierung? (June 9, 2011, Silicon)
- Die 25 größten Software-Anbieter (June 6, 2011, CIO)

Here’s our selection of the best IT press articles.

- Does technology have to look good? (June 3, 2011, CNN)
- IT Manager Numbers (June 6, 2011, Computerweekly)
- local government offshoring head of steam building and I think Serco knows it? (June 3, 2011, Computerweekly)
- IT workers in local government braced for offshoring avalanche (June 2, 2011, Computerweekly)
- France bans Facebook and Twitter from radio and TV (June 4, 2011, ZDNet)
- Asian startups need connections, clear vision (June 3, 2011, ZDNet Asia)
- Silicon Valley still top location for IT professionals? (May 25, 2011, ZDNet Asia)
- ERP-Strategie auf dem Prüfstand (June 6, 2011, CIO)
- Weniger Outsourcing in der Schweiz (May 31, 2011, Inside IT)
- Die Top-Prioritäten der CIOs 2011 (June 1, 2011, CIO)
- Cloud: Wie weit sind Anbieter und was planen Anwender? (May 30, 2011, ZDNet)
- So zahlungskräftig sind die Staaten (June 3, 2011, FTD)

I hope you will enjoy our selection.

- Google and Facebook reject internet regulation at G8 leaders meeting (May 27, 2011, Computerweekly)
- Shared services not worth the time in public sector? It can’t be true. (May 27, 2011, Computerweekly)
- Most businesses shun public cloud but consider private cloud (May 27, 2011, Computerweekly)
- The CIO of 2014: Venture Capitalist, Orchestra Conductor, Contract Negotiator (May 25, 2011, CIO)
- The future of the Internet: it’s in the app (May 26, 2011, ZDNet)
- Uncovering the DNA of successful startups (May 30, 2011, ZDNet Asia)
- Hälfte des Budgets geht ins IT-Outsourcing (May 27, 2011, CIO)
- Die richtige Cloud-Management-Strategie für Unternehmen (May 27, 2011, ZDNet)
- Cloud treibt Outsourcing voran (May 26, 2011, Automotive IT)
- IT-Entwicklung im Mittelstand (May 26, 2011, Computerwoche)
- Cloud Computing erobert die Unternehmen (May 24, 2011, IT Business)

Here’s the selection we prepared for today.

- Adopt ‘right balance’ for green clouds (May 23, 2011, ZDNet Asia)
- Calculating Virtualization and Cloud Costs: 4 Approaches (May 19, 2011, CIO)
- The Impact of ‘Enterprise Technology’ (May 20, 2011, CIO)
- Why Brazil’s most innovative institution comes from Recife (May 22, 2011, The Next Web)
- Cloud Industry Forum backs EC cloud computing consultation (May 23, 2011, Computer Weekly)
- Innovation: a hoary old scab, or something worth talking about? (May 17, 2011, Outsource Magazine)
- No Strategy, No Worthwhile Innovation (May 23, 2011, Business Strategy)
- Die schmutzigen Geheimnisse der Virtualisierung (May 23, 2011, CIO)
- Die besten Systemhäuser (May 20, 2011, Computerwoche)
- Begräbt Cloud Computing die Storage-Industrie? (May 18, 2011, Silicon)
- Deutschland ist sicherste Surf-Region im Web (May 18, 2011, Silicon)
- Zürich als trendige Lok – auch im IT-Bereich (May 16, 2011, Inside IT)

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Pentalog started becoming a 2.0 company as early as the year 2000 and perhaps even before that. Open capital, figures made public, transparent strategy, openness for all employees, all of this was implemented more than 10 years ago. The web has played a vital role in this strategy and, without this technological revolution, I don’t think it would have been possible to build such a company. Everything from sales to recruitment goes through the web channel which is continually expanding and supports more and more sophisticated productions.

In this respect, our fourth web policy, materialized through the launch of www.pentalog.com V4 in September 2010, was to offer more animations, as well as video images. Our videos have been viewed more than 66,000 times and we have had our own Youtube channel for several months. We have already produced over one hundred videos.

Nevertheless, neither the quantity, nor the quality are sufficient. We are therefore launching an internal webTV equipped with a set and professional technical resources. It will produce two types of content: on the one hand, corporate videos for meeting the company’s immediate objectives (related to sales and HR) and, on the other hand, talk shows on complex subjects discussed with professional guests. The shows will be produced by Pentalog TV and perhaps by other specialized web channels, as well.

The Iasi center has been chosen to host the set, for several reasons. First of all, it is a dynamic site which regularly receives Pentalog clients. Secondly, it hasn’t hosted any of the company’s cross-department functions before. We have now accomplished this. Finally, the center can be reached by plane from Bucharest and Vienna and is greatly used by our German customers.

The pilot productions have been filmed this week. They feature developers, Project Managers, an Office Director and technical experts of the company. A complete list of shows has been drawn up. We now need to create an editorial department, credits etc.

As for the meeting of our corporate objectives, the use of the video channel had become vital. Try, for instance, to search for “SSII offshore” (offshore IT service company) on Google and you will find a Pentalog video that offers a visit to the Brasov office at the beginning of the second page (www.pentalog.fr is on the first page). Videos are part and parcel of our SEO (search engine optimization) strategy. In fact, videos “give life” to content and highlight project carriers and all participants. After having produced thousands of content items for the semantic web, and even though we will continue to do so, we need to increase the number of our video productions and consider Youtube as a document platform and a search engine in itself. But what I find particularly appealing is the ability to prove the existence and performance of the services and teams of our IT outsourcing company, whereas all our competitors continue to rely on 1.0 technologies and often speak of things that they don’t do or of human and technical resources that they oversize to considerable extents. It is a lot more difficult to cheat using animated images. Images will therefore become vital in creating any type of communication products, including online business cards, success stories or direct recruitment by project teams.

I’d like to take this opportunity to thank my friend Lucie Brasseur who is helping us with this project. She offered us both her services and her production equipment. The vivacious host, who is a producer and owner of Twideco TV in Orléans, will allow us to save considerable time. I am extremely grateful to her. We have posted online a first non-edited production of a strategic discussion between Catalin (Iasi Office Director) and I, in Romanian. Even if you don’t speak Romanian, wait until the middle of the video and you will be amused . The collection of bloopers already looks promising

Outsourcing, offshoring. Two tags of this week’s IT press review. I hope you will enjoy it.

- CIOs increase investment in outsourcing and select multiple suppliers (May 13, 2011, Computerweekly)
- Offshoring: 7 Tips To Prepare for India’s Proposed Privacy Rules (May 13, 2011, CIO)
- Limelight Buys Web And Application Acceleration Technology Startup AcceloWeb (May 9, 2011, Techcrunch)
- Can the UK ever match Silicon Valley? (May 16, 2011, IT Pro)
- Should government rely less on outsourcing and have more web developers in-house? (May 13, 2011, Computerweekly)
- Android 3.1: Crowd-pleaser or heart-breaker? (May 13, 2011, ZDNet)
- China top in green tech money (May 9, 2011, ZDNet Asia)
- IT Leaders Forum: Practical next steps in migrating to the cloud (May 13, 2011, Computing)
- Die Trends beim IT-Outsourcing (May 16, 2011, CIO)
- Deutsche Unternehmen sehen bei Offshoring noch Potenzial (May 13, 2011, Silicon)
- Unternehmen suchen Weg in die Cloud (May 10, 2011, Computerwoche)
- Studie: CIOs setzen auf schlanke IT (May 11, 2011, Automotive IT)

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I hope you will enjoy our selection.

- How to plan now for hybrid cloud management (Mai 3, 2011, IT World)
- IT professionals are impulsive risk-takers, finds survey (Mai 6, 2011, Computerweekly)
- IT services sector bounced back in 2010 (Mai 4, 2011, Computerweekly)
- Tech startups want ‘right fit’ with investors (Mai 9, 2011, ZDNet)
- IT Outsourcing in China: What CIOs Need to Know About New Data Privacy Guidelines (Mai 4, 2011, CIO)
- Bringing IT Back Home: 10 Prime Locations for Onshore Outsourcing (Mai 3, 2011, CIO)
- Don’t Let The Innovation Lab Become An Ivory Tower (Mai 5, 2011, Information Week)
- India Adopts New Privacy Rules (Mai 5, 2011, Information Week)
- Outsourcing: Deutschland gibt den Takt vor (Mai 6, 2011, Automotive IT)
- Der deutsche Cloud-Computing-Markt 2011 (Mai 5, 2011, Silicon)
- Der beste IT-Nachwuchs kommt aus Karlsruhe (Mai 4, 2011, CIO)
- Alles über Virtualisierung (Mai 3, 2011, Computerwoche)

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Here’s our selection on the best IT press articles.

- The monarchy and technology through the ages (April 29, 2011, ZDNet)
- Clients want access to CEOs at Indian outsourcers: report (April 29, 2011, IT World)
- IT-business alignment a thing of the past (April 28, 2011, IT World)
- IT professionals getting too comfortable despite the choppy economic waters (April 28, 2011, Computerweekly)
- Build Or Outsource That Business Integration Project? (April 29, 2011, CIO)
- Cloud Computing Providers: Clueless About Security? (April 28, 2011, CIO)
- Mitigating the Risk of Cloud Services Failure: How to Avoid Getting Amazon-ed (April 25, 2011, CIO)
- Innovator: Bruce Thomas’s Projection Technology (April 21, 2011, Business Week)

Don’t forget about our German press section!

- Cloud-Services aus Deutschland (April 29, 2011, Computerwoche)
- >IT-Branche muss mit knappen Waren rechnen (April 28, 2011, CRN)
- Viele IT-Projekte scheitern am Testing (April 26, 2011, Computerwoche)
- Cloud Computing: besonders erfolgreich bei jungen Unternehmen (April 26, 2011, ZDNet)

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And we are back with the IT offshore press review. Enjoy!

- IT consultants: The good, the bad and the downright incompetent, part 1 (April 25, 2011, Computerworld)
- How to integrate your organisation’s IT services (April 19, 2011, Computer Weekly)
- Moving to the cloud ‘could increase energy costs’ (April 19, 2011, Computer Weekly)
- How to integrate your organisation’s IT services (April 19, 2011, Computer Weekly)
- China’s Outsourcers Poised for Growth (April 20, 2011, CIO)
- Offshore IT and BPO Services Subsidiaries Still Popular (April 20, 2011, CIO)
- Why social business is different (April 25, 2011, ZDNet)
- 180 deutsche Zulieferer in China (April 19, 2011, Automotive IT)
- Die IT-Folgen der Japan-Katastrophe (April 21, 2011, CIO)
- Die CIO-Trends 2011/12 (April 18, 2011, Silicon)
- Professionelle JavaScript-Tools fürs Web 2.0 (April 23, 2011, Computerwoche)

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In a “tech start-up” mood? Enjoy your reading!

- Kickstarter breathes life into tech start-ups (April 17, 2011, ZDNet)
- Indonesian tech startups pique investors (April 14, 2011, ZDNet Asia)
- Cloud changing face of data centers (April 18, 2011, ZDnet Asia)
- Don’t Buy Into the Cloud-Based Call Center–Yet (April 15, 2011, CIO)
- India Emerging As a Large BPO Market: Gartner (April 12, 2011, CIO)
- Risk Management in Cloud Computing (April 15, 2011, CIO)
- Case study: A smart city is a sustainable city (April 16, 2011, Computer weekly)
- Sieben Tipps für erfolgreiches Cloud Computing (April 18, 2011, Industrie Magazin)
- Kaum IT-Konsolidierung im Mittelstand (April 14, 2011, Automotive IT)
- Rekord-Nachfrage nach IT-Freiberuflern (April 13, 2011, CIO)
- Gute Noten für IT-Standort Schweiz (April 13, 2011, Inseide IT)
- So wechseln CIOs den Outsourcing-Partner (April 12, 2011, CIO)

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We start this IT press review with a very interesting article on how to choose the best city to start your business in case you are a “minority entrepreneur” in the US.

– The Best Cities For Minority Entrepreneurs (31 March 2011, Forbes)
- Japan disaster puts historic hurt on chip industry (01 April 2011, ComputerWorld)
- Sex discrimination rife in IT, says report (01 April 2011, ComputerWeekly)
- Report: IT departments must harness social media (01 April 2011, Computing)
- IT Outsourcing: Study Highlights Impediments to Innovation (30 March 2011, CIO)
- IT Needs to Plan for What Comes Between Now and Later (31 March 2011, CIO)
- H-1B Visas Need to Be Easier to Get, Business Leaders Say (01 April 2011, CIO)
- Arbeitslosenquote sinkt um 0,3 Prozentpunkte (31 March 2011, Manager Magazin)
- Indische Anbieter investieren verstärkt in Unternehmensberatung in Europa (31 March 2011, IT Business)
- Im Mittelstand ist Veränderung Pflicht (31 March 2011, CRN)
- Die Wahrheit über Cloud Computing (28 March 2011, CIO)
- Kosten für IT-Projektberater gesunken (28 March 2011, Automotive IT)
- Indien, China und Malaysia attraktivste Offshore-Länder (28 March 2011, Automotive IT)

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A selection of the best IT articles of last week.

- Women in IT: A seat at the table (March 25, 2011, IT World)
- IT, the business, and the clash of cultures (March 21, 2011, Computerworld)
- Avoid 3 Cloud App Development Sand-Traps (March 23, 2011, CIO)
- Age Discrimination in IT: What Would You Do? (March 23, 2011, CIO)
- Server Virtualization: 6 Management Myths (March 24, 2011, CIO)
- CIOs must cash in on supplier innovation (March 23, 2011, Computerweekly)

And now the German IT press review of last week:

- Bei deutschen Firmen in Japan läuft die Produktion wieder (March 25, 2011, Computerwoche)
- Cloud Computing: Der Turmbau von Babel (March 25, 2011, Silicon)
- Mittelstand will in Green IT investieren (March 25, 2011, Automotive IT)
- IT-Freiberufler mit geballter Berufserfahrung (March 23, 2011, CRN)
- Was CEOs wirklich machen (March 22, 2011, Silicon)

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The latest IT press review. Enjoy!

- Research Report: The State of IT Systems Management (March 17, 2011, Computerweekly)
- Facebook removes the Comment button (March 18, 2011, ZDNet)
- Japan quake shakes up global IT supply chain (March 17, 2011, ZDNet Asia)
- Cloud Computing: A Sustaining or Disruptive Innovation? (March 16, 2011, CIO)
- Website aims to improve IT projects in New Zealand (March 21, 2011, Computerweekly)
- Olympics to create 5,000 UK IT jobs (March 21, 2011, Computing)
- Die reichsten IT-Unternehmer Deutschlands (March 18, 2011, CIO)
- Green IT in Deutschland bis 2012 (March 18, 2011, Silicon)
- IT-Ausfall kostet 2300 Euro pro Tag (March 16, 2011, Computerwoche)
- IT-Industrie nach Erdbeben in Japan mit Fabrikschäden, Produktionsstopps und Evakuierungen konfrontiert (March 15, 2011, Inside IT)
- 2011 wird das Jahr von PaaS (March 14, 2011, Computerwoche)

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Dear merchant banks, which are regularly harassing me, this friendly post is addressed to you as an answer to your constant questions on the “external growth” options for Pentalog.

How is it that Pentalog, major player in the offshore nearshore outsourcing sector, continues to ignore the numerous buyout opportunities offered by all merger and acquisition operators on the Paris market?
It has been my long-time belief that external growth has many detrimental effects for any company that generates an average organic growth above 30%. We have never gone below this level since 2005! Why in the world do you want me to risk upsetting this rhythm by dealing with the political throes of a merger? Without mentioning that the value of the companies that you present is always overestimated, which doesn’t encourage me to pay attention, nor even to take you seriously with regard to the advice that you might lavish on me. This year, we will normally increase our sales figure by 5 to 6 million euros, with a rise in our working capital requirements by less than 800,000 euros and an immediate marginal profitability above 12%! Any company that you may suggest which has a sales figure of 5 million euros will be offered to me for a price ranging between 2 and 5 million euros, with an EBIT between 5 and 8%! Why should I go through such trouble with a risk of breaking the virtuous mechanisms, for an uncertain benefit and a capital cost multiplied by 3 to 6 times?

I will add that throughout all these years, I have developed a taste for customer service, which makes me shun this type of strategy. What is never said is the fact that buying out IT companies doesn’t lead to greater responsiveness towards existing clients. The company which is bought generally has its own backlog, which makes it impossible for old clients to access the new resources! A Pentalog client doubles the amount of its orders almost every year. If I were to allocate my cash flows, or increased capital, to external growth operations, I would proportionally reduce my working capital available and necessary for fueling the growth of my existing customers… therefore doing a disservice to them in the end.

Not only is this choice inappropriate for Pentalog, but it is also a choice that hasn’t been made by any of the high-performance offshore nearshore outsourcing companies that I know of. We generate a high and profitable growth and our structural productivity parameters greatly exceed those of the other Western IT companies. Do you know that the committed costs (per invoiced employee, all the way up to the CEO level) of premium IT companies in France is situated between 1,500 and 2,000 euros/month, while at Pentalog they will go below 1,000 euros in 2011 or 2012? We will achieve this although our onsite staffing services make up for less than 10% of our sales figure, as part of an all hosted model, which is a lot more capitalistic, however. Our current position, from a scale economy perspective (which is often at play in models of merger between French IT companies) is therefore very favourable, as well. Western resources that we are interested in have a higher level than those that you offer, and are only to be found in the fields of project management and consulting. Our French development relies only on adapting the volume of our management and consulting human resources. Our almost unique position as a Western offshore pure player has turned us into a complete “Demand Catalyst”, according to my friend Benjamin Cernes, who is also a strategy consultant and merchant banker. He means that Pentalog doesn’t look for clients, it receives orders. Which is true, as we only have four sales managers out of a total staff of 650 employees.

External growth will be taken into account, dear merchant banks, when Pentalog’s internal growth rate sinks below the 30% threshold on a long-term basis or when the company value bubble which has developed over the last few years explodes. We will also consider this matter when, before contacting us, you study our company, what its ontologies are (and this isn’t difficult, given all the information we post online in complete transparency). How do you want to convince me if you offer outdated models (technical assistance and small-scale fixed-price projects), which aren’t compatible with our Business Model and for 20 times the value of their EBIT for the last fiscal year? I am not buying it. Your business should rely on strategic analysis models, particularly at a time when the offshore sector, the cloud, the 35 working hours, the economy modernization law… have had lasting effects on behaviours and economic ratios of the sector.

In short, I would like you to consider me as a particular case, as early as your next call. You are not selling mobile phones! All of this doesn’t prevent me from closely analyzing your own field of activity . To be continued…