It is not our business policy to speak about potential contracts before signing them. However, these 3 particular business deals have a highly significant meaning. Their respective volume, in countries which are very far from each other, prove to what extent our nearshore service brand has henceforth become well-known. In Romania, Pentalog brand stands out as a national leader whose name is the first conjured up by those who want to carry out significant projects in sectors like software and internet. In Germany, our IT services company holds a place which can be henceforth comparable with the one held in France, not so long ago, in 2006 or 2007. We have gained our position in less than 3 years and we can see that things are definitely evolving. At the end of 2011, Pentalog is known practically throughout the EMEA area, as one of the main players of the Eastern Europe nearshore.

How much are these 3 contracts worth?
At least €11M overall per year. In a more optimistic view, these 3 business deals could yield €17M sales figure per year for Pentalog, which equals roughly our sales figure for 2010. These 2 contracts would have a minimum life span of 3 years… so this could mean a total amount of as much as €33M to €51M!
If I’m talking about it, it is because in 2011 Pentalog managed to sign a few contracts worth several millions. In addition, there are also smaller offers, which are still under negotiation. Therefore, I am fairly more optimistic as to 2012 than my colleague Monica, who shows more moderation .
Then of course, we might sign none of the 3 contracts… and this has to be considered. Or, on the contrary, all 3 ? The smallest is worth 2 millions per year and the biggest up to 10 millions. I consider that, whatever the case may be, although 2012 is heralded as a very difficult year, Pentalog’s position and market share on its areas of choice will record new progresses and that our company will become even more appealing, thus continuing to attract the best employees in the countries where it operates. We remain one of the few platforms in Romania which is able to develop projects involving up to 100 employees and which allows our project managers, Delivery Center managers and project directors to benefit from a 40% average annual growth in the last 4 years.

Therefore, keep an eye on our recruitment offers in case we sign these contracts as they will bring great technical and management opportunities. And in case we don’t, well, we’ll be happy to have been considered for so highly rated projects and it will be just a matter of time until we make it!

I wish you all have lovely winter holidays and a great new year in 2012!

Following a 1000 km road trip and 5 days of audits performed on Pentalog sites in Brasov, Iasi and Chisinau, the AFNOR auditor has just decided in favour of the renewal of our ISO 9001:2008 certificate*, and its extension to People Centric, our recruitment subsidiary.

During one week, the top and middle management, our sales activities, our human resources management activities (recruitment, skills management, training), our support activities (purchasing, information systems), our improvement loop, as well as a dozen projects have been audited. The sampling was highly representative for the diversity of projects of the group: team made up of 25 to 40 individuals, small teams, fixed-price projects, projects entirely steered by clients, outsourcing, recruitment, French projects, English projects; French, Belgian, German, Swiss customers …

In all the audited sites, the auditor was able to acknowledge the compliance and the functionality of our quality management system, its flexibility and improvement, as well as its suitability to our needs for growth and responsiveness.
Thus, there are numerous strong points emphasizing the involvement of the management in order to support and promote the continuous improvement in Pentalog (it outsourcing company), the maintenance of our growth rate and our financial results during this crisis period, a high recommendation rate from the part of our customers (93.55%), a well implemented system for the assignment of duties, the capacity of our system to adjust to our customers’ special requirements, a good use of tools to support our processes, an internal and customer communication, as well as a recognized sharing of good practices and knowledge.
In addition, several progress trackings, all related to the system improvement loop, have been identified in order to continue to improve our efficiency and our know-how.

Even if it’s not in my nature, today I am really proud of the progress we achieved together, over the past 4 years, and of the quality of the projects and activities we have presented during this week. Everybody’s involvement and efforts have not been for nothing, and today they are fairly rewarded.
Many thanks to all the audited persons for their participation, and to all Pentalog employees who invest themselves, day by day, for the satisfaction of our clients, of their clients, and to sustain the growth of company for all.

*Certified activities: SOFTWARE DESIGN AND PRODUCTION, SOFTWARE MANAGEMENT, TECHNICAL ASSISTANCE, INFRASTRUCTURE MANAGEMENT, BUSINESS PROCESSES OUTSOURCING and RECRUITEMENT.
Sites concerned by the scope of the certification: France: Orléans ; Romania: Bucharest, Brasov, Iasi, Sibiu ; Moldova : Chisinau. Companies concerned: Pentalog, Pentalog Technology (JV with Ausy), People Centric.

During a PM Camp on 24^th August, Cornel and I organized our first Innovation Games inspired from the “Buy a feature” exercise. We already have a whole range of training materials available in our catalog drafted for the Incubator, our internal training center. However, for those who have already had some practice with agile software development methodologies and change management, mastering the knowledge is not enough. Individual behaviors are essential for project success.

It is within this framework that we are preparing a training session, “Agility within projects”. Its aim is to emphasize the valuable behaviors when working on a project, through several practical games. Of course, we do not claim to impose a unique behavior, as everybody has their own sensibility, but the purpose of the exercise is to increase the participants’ awareness of other behaviors in environments created from scratch.

For this game inspired from “Buy a feature”, we explained to the participants that each of them would receive a part of the budget from the technical management and that they had to distribute it to a total of 16 missions. They received 20 banknotes of 100 PentAgiles. They could distribute their budget as they saw fit, omitting to allot a budget to a less important mission.

Here is the list of the 15 missions that we selected. Of course, they are taken from real technical management missions.

1. Technical audit at the project start-up
2. Technical audit during project execution
3. Support during the project
4. Technological monitoring
5. Investing in production tools
6. Adapting the needs to the market
7. Making estimates for quotations
8. Appointments with clients
9. Training in best practices
10. Training in tools
11. Training in methods
12. Organizing the sharing of knowledge
13. External communication
14. Internal communication
15. Setting up production indicators

Once the banknotes were distributed, they all became technical directors and started allotting their share of the budget without trying to join resources with a colleague in order to improve the distribution. Therefore, some of them chose not to allot budget to missions such as communication and production indicators. In all cases, they made unilateral choices. In this situation, good agile methodologies practice would have been working in groups to share their opinions and to reach a collaborative prioritization.

This kind of behavior was anticipated. Thus, we have planned a second round, when they were specifically asked to split into two teams, each having the whole budget of the technical management. Various and diverse discussions took place. A team whose members work on Scrum projects decided to vote and reached a consensus. The other team, whose members had various backgrounds, discussed first of all on how they had to organize themselves. Then, they started discussing on the distribution of the budget. Both teams exceeded the time limit set for the discussions. I had set a 15-minute time limit for the first part. I had deliberately (and successfully) trapped them by not setting a time limit.

In conclusion, here are several lessons to be learned from this exercise:

- When it comes to collective work (sharing the budget), it is important to collaborate and exchange in order to ensure the needs are met.
- Even in an environment where there are few rules, it is advisable to establish some requirements (common methods, etc).
- The relationship with time is often complex, as each of us has their own sense of time, but we must manage time by imposing a time limit to a collaboration. It must remain effective.
- In an environment without a designated manager, one can notice that the people who take control are those who have the will to make the mission progress.

The participants will be able to express their views on this blog regarding this exercise, but it was rewarding as a first experience. For the future PM Camps, we’ll do other exercises, otherwise, we won’t be able to have 2 rounds anymore.

For those interested in these innovation games, I advise you to read Luke HOHMANN’s book, “Innovation games”. You’ll find the description of other games in this book (among others):

Speed Boat: Identifying what the client doesn’t like about your products or services.
Product Box: Identifying the most exciting product characteristics.
Remember the Future : Understanding your clients’ definition of success.
Show & Tell: Identifying the most important artifacts created by your product
Start your day: Understanding when and how your client uses your products.

I’ll have the opportunity to come back to the results of these experiments through Innovation Games. We are within an Agile cycle, we experiment, evaluate and decide (PDCA).

On Saturday, the 24^th of August, Cornel and I organized a Project Management Camp in Chisinau, the delivery center (DC) of Pentalog, of about a hundred people in the Republic of Moldova. We organize this kind of events in the DCs several times a year to bring project managers and team leaders together and enable them to exchange ideas and to be informed about new perspectives on a project concerning the organization, management, and, sometimes technical aspects. These events are deemed very collaborative and interactive.

The theme of this session was aimed at improving the maturity of practices and participants in projects. The topics proposed to the ten participants were the following:

- System dynamics, root causes, continuous improvement and learning cycles, retrospectives
- Business value, value VS waste, Value Stream Map, Lean Management
- Wishful thinking, Team Velocity, Planning and Estimation
- Self-Organizing teams, Definition of Done, Team welfare
- Differences between traditional development and agile software development methodology

On Friday evening, the participants who accepted the invitations voted for the 3 topics (in bold on the above-mentioned list) they wanted to be covered. In addition to these topics, I presented the tools used by the infrastructure team to manage our virtualized infrastructure in our data center. They already know how it is done since the deployment of our new infrastructure. I also presented the provisioning interface layout which will enable them to manage the virtual machines themselves within the limits of the resources made available for the project as regards our private cloud.

Business value, value VS waste, Value Stream Map, Lean Management
This topic was covered in three stages.

- Theoretical presentation of these topics
- Presentation of experience feedback in the field of agile / lean software development methodologies and a concrete application example of value stream map
- Organizing a practical exercise for emphasizing the value of collaboration. I will talk about this exercise in a future article.

Wishful thinking, Team Velocity, Planning and Estimation
The concepts were quickly presented in order to be able to share experiences. Cornel detailed several indicators to match the team’s speed. We agreed that one of the participants would lead a sharing knowledge session based on their assessments on related items.

Self-Organizing teams, Definition of Done, Team welfare
When comparing the “Command & Control” and “Self-Organizing teams” concepts, the participants expressed their views depending on their current experience and projects. Our aim was not to reach the conclusion that only one approach was perfect, but to set a clear trend towards a self-organizing team for projects where the needs are clearly expressed.

As we systematically calculate it at the end of a PM Camp, the ROTI (return on time invested) rate was 3.8 (the grades were between 3 and 5). Around the closing round table, all the participants proved to be very satisfied with the covered topics and the interactivity of the discussions. Many thanks to the project managers for attendance and active participation.

PM Camps will go on taking place in other delivery centers. The organization and the topics are to be suggested in Iasi, Brasov, Bucarest, Cluj and Sibiu.

Pentalog Group, through its Board of Directors, decided to change the organization chart and to divide its General Management activities in two sections: one dedicated to strategy, international issues, business development and marketing, and the other dedicated to operational management, including production and production structure management, financial management and reporting, management and development of existing partnerships, information system management, technical management as well as the incubator.

Within this framework, Frédéric Lasnier, French, 41 years old, current CEO, President of the Board of Directors and founder of the group will be in charge of the first section, while Monica Jiman, 34 years old, Romanian, formerly COO, will assist him from now on in his duties by becoming Deputy CEO. She will be in charge of the second section.

This new organization of the group aims at adapting the group to the ever-increasing client demands and to its geographic expansion. On these grounds, in the following weeks, the organization chart will be modified accordingly. As a reminder, Pentalog Group, No. 1 in the fields of software R&D and offshore IT Outsourcing in the European Union has offices in France, Romania, Germany, Vietnam, Israel and Republic of Moldova. By the end of August 2011, the group’s number of employees will have gone up to 700.

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?

Pentalog began its Vietnamese adventure in 2009. For 2 and a half years, the office was managed by Tuan Nguyen Quoc. A great team of 60 people is in charge of several customer projects (Altadis Imperial Tobacco, Sierra Wireless, Active System, Lexware, People Centric, Anevia etc.) or internal projects. Moreover, a team of 8-10 people will start a project for another important client in September.
This growing trend is only just starting. Our Asian strategy requires that we take steps forward, as part of a company development process which will have a special focus on the Asian market.
All multinational companies made this choice a long while ago, as the economic dynamism of the region cannot be ignored.

In the scope of this new organization, Marc Charbit has taken over the management of the Hanoi office. He joined the company at the beginning of June and spent his first weeks at Pentalog in the Romanian and Moldovan offices and at the Orléans headquarters. He is a young French manager with international experience in one of the top 5 French IT companies. He moved to Vietnam 5 years ago and has developed a strong relationship with this country, considering that he even learned the language. Like all valuable Pentalog employees, he is multilingual. He speaks Vietnamese, English, German, Slovak and, of course, French. He will play a major role in implementing the quality policy and preparing the Hanoi office for the ISO certification.

Welcome Marc! A great challenge lies ahead of you!

As Alex revealed to you last week, PeopleCentric was referred to many times in our meetings in California, both with regard to its role in Pentalog’s growth and success, and regarding its own potential. We will necessarily resume the latter aspect in the following weeks, in the scope of the capital increase launched by the French-Romanian start-up.

Today, I will rather talk to you about the growth potential detected by Pentalog in terms of outsourcing demand. Indeed, everywhere we went, we encountered the same issues concerning the lack of resources in start-ups, as well as in major companies. We visited Salesforce, we talked with Apple employees, former HP staff members, all of whom confirm that developers are rare and, in some cases, very expensive. The most talented of them, who use the most popular technologies and work on algorithm cores, can claim salaries of more than $200,000. And this is not an average. On the other hand, wages offered by start-ups are often supplemented by a payment in shares. This is also a simple way to temper down cash claims. The larger of these companies make use of this instrument to pay smaller salaries in the end by making their employees bank on the quality of the business plan.

Thus, outsourcing tendencies are becoming widespread, to the benefit of the major Indian companies, of course, but not only them. Eastern European companies are indeed very appreciated and promote themselves rather as emerging technological companies. Ukrainians, Russians and Belarusians in particular are widely represented here. Several Romanian IT companies are also present, as well as Chinese, Philippine and Vietnamese providers. Vietnam and China have a very bad image, mainly because of their communication difficulties and their teams’ lack of interest in the clients’ projects. This does not fit our view of the country, even though we share this opinion as regards their linguistic problems.

We have not taken a formal decision yet in terms of opening a subsidiary in the USA. Obviously, Pentalog’s numerous assets, like the Incubator or its fast ramping capabilities, are quite appreciated here, as high quality offshore companies are not so numerous. The marketing operations to be deployed are considerable. The small time difference, which is one of Pentalog’s assets in Europe, is irrelevant here, as well as our use of the French language, which, of course, is quite irrelevant to American companies. Therefore, we need to find something else. Pentalog’s impressively low human resources turnover rate project a favourable image on the company, as well as our participatory model resembling that of American companies, or our QMS and our satisfaction and recommendation rates.

In fact, our first feelings are excellent. We have no less than 4 commercial propositions to make following a presence of only one week. I can already envisage a next trip to California in the near future, somewhere between August and November, for instance. Will we have made a first closing deal by then? It seems difficult but, after all, why not?
This adventure is very demanding for me as it is part of an overbooked agenda. But isn’t organization a talent that I am supposed to have !? Many people tell me that American subsidiaries cannot be created as long as the business owner does not make a long-term journey in the country. I simply answer them that I am going to think about it and that it is not an easy decision. The transfer of the headquarters is also taken into account in certain cases: Talend, Business Objects, Viadeo are some of the French examples.

Alex and I would like to kindly thank all the people whom we met or who assisted us in organizing these exciting discussions. I am thinking of Carole Granade from the French-American Chamber of Commerce in San Francisco, of Rémi Vespa who was a colleague of my father’s at the end of the 80s and who has lived in SF since 1995. I am also thinking of Anthony, Frédéric, Anselme, Matt, George Haber (a major Romanian veteran in the Silicon Valley), Gwendal, Carlos, Jorge… Finally, I would like to express my deep gratitude towards my colleague Jean-Michel Fournier, who was my client at the end of the 90s, and especially a true friend at the beginning of my career, just like I was his friend. He became a Pentalog associate just when he left for the USA to build an outstanding career as an executive VP for major companies (HP, Unisys, United Health Group), he has remained my friend and provided us with a great welcome and useful advice. Thank you…

In 2006, Pentalog employees had an average age of approximately 25 years. This average has now risen to 28 years. As we faced a high turnover, we had to come up with an employee retention policy which included a remuneration system based on the recognition of our employees’ efforts. The problem is that the very notion of effort is not the same for everyone and, moreover, recognition of what is considered an effort or not varies with age. Considering that I myself am not an early riser, as everyone knows , I could well understand that it might be difficult for 25-year-olds to be punctual in the morning. Nevertheless, briefings and scrum meetings require the presence of the entire team. Thus, taking into account the young age of the staff in our IT outsourcing company, we decided to turn morning punctuality into a bonus criterion. I can tell you that the earliest risers among Pentalog managers could not be easily convinced

Objectivizing recognition

Likewise, we have always preferred recruiting rational and creative individuals who are able to come up with propositions for their clients, in addition to respecting the production processes, draw up the reports which enable us to invoice, to document their work and many others, which are seen as constraints by talented developers. If nobody at Pentalog questions the efficiency of the ISO 9001 quality system, that is because it is closely linked to a remuneration system which includes regularity and process follow-up.

The end quality of the delivered product and the respect for deadlines are also included in the financial rewarding system.

Whatever the case may be, the bonus system seemed like the most obvious objectivization method of employee recognition. In total, there are no less than 40 criteria which are taken into account on a daily basis by our PMs in order to determine the individual monthly bonus of each member of their teams. We are fond of this type of management innovations which render us different from other companies. Indeed, even though management costs related to such a system are significant, especially with a workforce of 650 employees, it offers us a considerable advantage when it comes to attracting and retaining human resources and renders Pentalog one of the best offshore nearshore companies in the world, with record satisfaction and recommendation rates, both in the East and in the West. Our latest internal satisfaction survey supports this claim. We are on the same tendency of permanently looking for harmonious systems designed to continually improve our performance. The waiting lists that we have in almost all of the cities stand as a proof.

From recognition to the sense of belonging

The other essential element that we promote, in agreement with the sociological studies on the Y generation, is the sense of belonging. Whether by searching for common values, joining innovation programmes or taking part in important holidays, we consider it of the utmost importance to support the project team, which is the elementary group of any IT company. Pentalog has a secret weapon for this – Team Beering! We have a small budget, which is limited because we don’t want to encourage alcohol consumption , which is designed to enable our project teams to go out for a drink together every once in a while, according to their own planning.

Finally, at a higher level, i.e. the office, the delivery center, the unit which is shared by over one hundred people, we allocate a small budget for different activities, like renting football fields, karting, the Christmas party or the collective holiday week which is so dear to our Vietnamese team. I actually heard that the latter were about to set off for a trip to Thailand. I would like to take the opportunity offered by this psychological and sociological article to wish them a good trip and a pleasant stay! Which just goes to show that expectations are not the same among the countries in which we have offices

The last point refers to online social networks. Both Pentalog and PeopleCentric display their values, their good or bad mood in complete transparency. Pentalog employees are quite active online. The Arab spring has shown everyone of us the political or rather cognitive importance of social networks. But Pentalog employees had already experienced this in Moldova, which witnessed the first Twitter revolution. Therefore, our online presence is quite natural, as these networks embody a world in which individuals experiment at great speeds their new preferences and new means of expression in harmony with the other members of their generation… Y, of course.

The Pentalog Group significantly increased its M2M revenues in 2011 through the arrival of two new major clients, one from France and the other from Belgium. All the other clients have placed additional orders and most of them are increasing the volume of their projects.

Pentalog developments for these clients focused on embedded applications (especially iPhone and Android, but we have also worked on low layers), as well as on control servers or intelligent network reporting servers (Mesh). In addition, we take over the development requests of NMS (Network Management Systems). Most embedded developments are carried out in C, while server applications are rather based on Java or .Net.

For Sierra Wireless, one of the global leaders in the equipment sector, as well as for the global leader on the commodities metering market, our activities aren’t limited to the mere development, as we have fully-equipped product certification laboratories (pre-production testing) in Chisinau (Moldova) and in Vietnam.

The currently booming M2M market will go up by more than 50% within Pentalog’s sales figure this year.

Connected microscopes, network crash test devices, oscilloscopes, an acoustic chamber, a TV studio, an editing system and video mixing consoles, 10 local and central datacenters, an ergonomics and design laboratory, satellite antennas, online stores, a steering room etc.

Pentalog, an IT services company, is equipped with incredible technological assets which allow it to continually improve its production. Of course, not all of this equipment is ours, but it enables us to gradually master it and, eventually, extend the field of our knowledge.

What other European IT services company oriented towards engineering or consulting can boast an acoustic chamber destined for the needs of mobile phone companies, a TV studio and multimedia laboratories and mobile features designed for our e-commerce customers? Except on our clients’ premises, I have seen this type of technological configuration only in major Indian companies which are ages ahead of Western European engineering companies. The latter continue to offer only man-hour-based services, whereas clients expect a genuine engineering solution which is fully integrated and industrialized.

Pentalog is now a technologically-rich multi-specialist firm, which collaborates with major companies and uses Open Source solutions, and is capable of providing a lot more than just code and third-party software maintenance services, without of course underestimating these activities . Thus, we can make product or service demonstration films, edit video sequences, produce augmented reality, but also test consumer electronic products, simulate M2M environments, test satellite connections, measure the quality of video servers, generate network crash tests, develop all the software layers of a mobile phone.

In all cases, we use the best specialists in the countries where we operate, who feel that Pentalog offers a rich environment for personal fulfillment. At a time when the focus is on convergence, Pentalog represents a great tool for its employees and helps its customers understand and deploy the most daring multi-channel strategies.

Pentalog pursues its efforts with a 29% growth in Q2, thus continuing the trend of Q1 (31%). This growth is half due to the extension of existing contracts, unlike Q1 which had seen the signing of an unprecedented number of new contracts which were immediately launched into production. Before returning to contract extensions, let us salute the arrival of at least six new clients, while the second quarter is still not over: three in France, one in Germany and two in Israel. One of them bears a strategic importance as it consists in taking over the developments of a future star of the French e-commerce sector, following a financial operation which didn’t go unnoticed on the Parisian market. This is a strategic operation also because it confirms the results that Pentalog already obtained in the electronic commerce field, especially with Magento. Moreover, one of the global leaders in social networking has chosen Pentalog for its development needs. Thus, the online selling platforms developed and set up by Pentalog will soon register an annual sales figure of approximately 1 billion euros. In Germany, we salute the signing of a Business Intelligence contract with a recognized clothing company, Gerry Weber. Following its Q1 record, the group boasts 16 new clients who have already launched their projects since the beginning of the year.

As regards extensions, Pentalog reports a second development since the beginning of the year of the operation carried out for the Telecom Billing software editing branch of the Ericsson Group (former LHS). This operation, which is being developed in Iasi, was launched in 2008 and will involve over 36 employees in a few days’ time. Likewise, one of our major real estate clients has just included more services in its request to Pentalog, while another customer operating in the same field has extended its contract with our company. In addition, the technological branch of one of the largest French energy groups has prolonged the contractual relations initiated in January with Pentalog in the M2M (machine to machine) field.

As for the Pentalabbs incubator, start-ups continue their fast-developing trend as they register a growth rate close to 100% in Q1 and Q2. They will develop by more than 50% in 2011. Their sales do not fall within Pentalog’s financial analysis scope.

For Q3, Pentalog expects yet another substantial growth, but at a lower rate. It will probably be between 12 and 18%.

The semester will therefore finish with an organic growth of approximately 30%, thus confirming both our international strategic options (Israel, Germany, Switzerland, Belgium) and the specific specialization efforts. E-commerce, M2M, embedded development in the mobile telephony sector continue to grow a lot faster than the rest of the market.

Pentalog received, on May 26th, a delegation of French deputies led by President Luca in our Romanian-Moldovan headquarters of Brasov. Following a lunch with a deputy mayor of Brasov and a visit to Sacele, a suburb of Brasov which is twinned with the town of one of the French deputies who were present, they paid us a visit in the late afternoon. My impression is that they were surprised by the French speaking skills of Pentalog employees, by their class and the scope of the operations that they handle. One of them said to me in an aside that he had discovered at Pentalog a different Romania, of a high technological and conceptual level, that he wasn’t aware of. He continued by saying that he found the country to be a natural European alternative to India in terms of large IT centers. I believe, despite the fact that this subject cannot easily be grasped by a Western European elected representative, that they understood that Europe was lagging behind in the field of software production because of the lack of engineers. Romania represents a possible solution to the current deadlock. Europeans must be all the more vigilant as Canadian and American offices are constantly recruiting Eastern European graduates and contribute to the migration of people who might as well join European projects.

The policies of certain European states resemble those of North-American countries in that they try to draw this population to their soil. Pentalog, a nearshore outsourcing company, uses another approach, as it contributes to the technological industrialization of an emerging European country by offering a high-level production infrastructure to professionals worldwide. Thus, we bring profits to our country of origin and export even from France, within and outside the Union. We have a European project, which was launched by French businessmen and which must now expand all over the world. We are very fond of our European framework which plays a vital role within our group and offers a privileged position to France and Romania.

The President of the delegation solemnly awarded us the National Assembly medal before taking his leave. I would like to thank them all, as well as the French Embassy, for the interest they have taken in us.

I am very happy to make this announcement today. Manuel will go up one level in the organizational chart and join the executive committee. He will be placed under the supervision of Monica Jiman, Chief Operations Officer, and next to Sophie Lelarge (Chief Sales Officer), and will take over the coordination of all production units (5 in Romania, 1 in Moldova and 1 in Vietnam) and will be in charge of production. More specifically, his tasks will include production management control, recruitment and the management of production human resources. He will be the direct supervisor of the Delivery Center Managers (the former Office Directors) and will coordinate the harmonious development of resources according to the strategic plan.

Manuel joined Pentalog at the end of his studies in 2002, as an assistant for Eric Gouin, who was then the Director of the Romanian branch and the manager of the Brasov office. Manuel, not Manu, became Office Director in 2005 and afterwards an important associate, and he has always offered his help, often through unconventional means, in order to help the company grow. He was the first to travel to Iasi to support the then inexperienced Office Director in accelerating operations. He did the same in Sibiu… and he currently spends more time in Cluj than in Brasov. My friend and our friend Manu, it is all these efforts that we would like to reward today through this nomination, because Pentalog recognizes the importance of friendship and team spirit within a large company project.

Good luck, Manuman, half Man and half Manu!

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

In just a few days, Pentalog, a major IT player in the offshore and nearshore outsourcing sector, recruited three first-rate managers coming from Alten, General Electric and Lexmark. They are joining us to fill the following positions: Assistant Quality Director (based in Bucharest), Project Director (Orléans) and Delivery Center Director (Hanoi). Welcome to Anca, Séverine and Marc!

There are more and more people working for high-calibre companies who decide to join us in order to take up important positions. This recent phenomenon is gaining momentum. Pentalog offers these young managers a unique company project through the balance between the size, the technical and strategic levels of projects and the focus on strong human relations and on the evolution of the whole through its parts. Pentalog has as many as 60 simultaneous projects, which involve up to 100 employees for several years, in approximately 20 countries (France, Germany, Romania, Korea, Vietnam, USA, India, Israel, Switzerland, Moldova, Belgium etc.). At Pentalog, they can also find trilingual colleagues (more than 75% of them!) who are involved in mobile platform development projects, understand an entire electronic board, are able to deploy a whole IT system of a bank (which has already been done), collaborate with some of the most important telecommunications operators, integrate and develop e-commerce platforms that generate sales volumes of more than 500 million euros, and have an internationally recognized M2M experience.

In short, Pentalog, which was until recently a high-level offshore and nearshore outsourcing IT company, has become a first-rate, multi-vertical, multi-channel global IT player which is recognized by the most important European clients and the best start-ups: 2 major subsidiaries of the Ericsson group, 4 subsidiaries of the Orange group, 3 of the Société Générale, one of GDF, Karavel Promovacances, Suez Environnement, Sierra Wireless, Strator (Imperial Tobacco Group), the Austrian Press Agency, TraceOne, the Elster Amco group, the Swiss Group Givaudan, Spir etc.

What they are all looking for at Pentalog is this unique cocktail which will enable them to make professional progress a lot faster and lead an exciting social life within a high-quality group of people. In 2011, twelve Pentalog employees (including developers) became associates, with company participations of between 0.2 and 3%, for a company value which is currently estimated at 25 – 35 million euros.

On April 30th, the Pentalog group had 70 more employees than on December 31st 2010. So, welcome to Séverine, Anca, Marc and all the others, and thank you for your confidence!

I have taken the decision to join my friends from PeopleCentric on their trip to Tunisia in May (around the 20th) in order to try and analyze the situation on the spot. My trip companions are going to meet students and professionals who are interested in engineering positions in France. A few months after the Tunisian revolution, I want to analyze for myself the qualities of the Tunisian IT offer and maybe meet potential partners who might be interested in Pentalog’s operational capabilities in Europe.

In Eastern Europe, more particularly in French-speaking Romania (18% of its population, i.e. 4 million people are French speakers), client companies started to arrive a few months ago in order to create a backup for their North-African teams and, in some cases, even to replace them. In Warsaw, one of the most important BPO players in North Africa told Monica last week that they needed to urgently set up a BOT (Build Operate Transfer) team of approximately 50 people in Eastern Europe, for one of their prominent clients.

Two weeks earlier, at the Spring Campus of Croissance+ in Avoriaz, the owner of a Tunisian-based call center told me that she considered the Tunisian electoral process to be a major risk, both before and after the elections, and that she was already migrating some of her teams to other French-speaking outsourcing destinations in North Africa and the Indian Ocean. “First of all, I think that this is a necessary part of my risk management activities. Secondly, my clients are demanding it” she said.

At Pentalog, we have identified two or three clients who joined us in the first quarter rather than choosing other nearshore outsourcing destinations, such as Morocco or Tunisia. We have also lost a client who banked on major price reductions on the other side of the Mediterranean following the recent events.

In short, whether it is to search for new partners or better understand our competitors, it is time I made this trip.

Pentalog, a nearshore outsourcing company,  is making quick progress with its strategy of implementing an e-commerce cloud which combines open source solutions (Drupal, Magento, Liferay etc.) and offshore and nearshore human resources. I should add that we are getting ready to start several projects for e-commerce and online entertainment leaders in the following weeks. The strategy of consolidating our competences on Ruby on Rail, Magento, PHP, Drupal, both in Romania and in Vietnam and Moldova is widely appreciated by customers who no longer find the solutions they are looking for on the consulting and human resources markets in Western Europe. This service-oriented cloud will be based on five expertise layers:

- e-commerce design and user-friendliness: Proof of concept, design, navigation
- development and maintenance: Magento, Drupal, Prestashop, PHP, Java etc.
- SEO-SEM: multilingual referencing, which extends well beyond the French language, is an absolute necessity within a more general e-commerce approach
- Localization: we can already ensure the implementation of French, English, German, Russian, Chinese, Japanese, Spanish or Italian versions.
- setting up specialized e-commerce platforms on customers’ premises or hosting them in our own redundant data centers, in Paris or Bucharest.

Relying on its high-level development capacities and its first-rate redundant hosting capabilities, Pentalog is now able to take on all types of e-commerce projects, whether small scale or large scale. By the end of 2011, the Pentalog teams will have helped e-commerce clients achieve a sales figure of one billion euros in France and Europe, and will boast a customer portfolio that includes several market leaders.

I don’t know how things stand with offshore call centers, but in the IT industry it is not uncommon to be somewhat influenced by personal attachments, more so than by cultural reasons, when making decisions with regard to the geographic location.
The Moroccan, Tunisian, Vietnamese diasporas, but also the Romanian diaspora (which is rather small in France, but much more significant in Austria, Canada or the USA), sometimes hold important jobs and can find themselves in the position of arbitrating a confrontation between their country of origin and other competitors.

At Pentalog, we have taken advantage of this aspect on a few occasions, whether through our Romanian employees or through people of Vietnamese origin. Of course, the sincerity and professionalism of their selection criteria are not called into question. However, I can honestly tell you that this choice allows employees, if not to reduce old scars, at least to fill a void, especially when these people are from the second or even third generation.

I won’t complain, because the involvement resulting from both sides represents a particularly efficient mechanism when launching together a complex international system which relies first of all, and in principle, on a more or less significant cultural gap. A very short while ago, a few Romanian IT professionals that we didn’t even know introduced us to one of the most powerful groups of the French web industry, to which we have already made several propositions. We have also lost a deal managed by a Frenchman of Vietnamese origin, who has chosen another Vietnamese company without consulting similar offers in other countries. The Technical Director and Project Manager, both Vietnamese, from another Parisian company, chose us in January in order to manage all the development projects of their company. Only Vietnamese companies had been previously consulted for these services.

These subjective reasons invariably lead to success, as the decision-makers in question pay a great deal of attention to the provider that they choose. Without realizing it, they invest a part of themselves in these choices. I would like to thank them on behalf of all the members of our teams, from all the countries where we are based. We are aware of the importance that this choice has for them. As this heart-driven reason is, after all, the most important, we are striving not to disappoint them.