When it comes to IT, it seems that the magic number is 20... €20 million to be precise. This is the turnover threshold that seems to qualify bidders in the minds of clients with complex, international contracts to award.
And with Crimsonwing on target to reach this revenue by 2014, it has been getting extremely positive attention, with a household name set to confirm a major contract in the coming weeks, CEO David Walsh said.
The company had revenues of nearly €18 million in the financial year ending March 2013, up from €15 million the previous year. Even more significant is that the company made a profit of nearly €1 million, after three dismal years when it saw its considerable investment in Dutch company VDA go sour.
“We had to assess the situation but decided to stick it out. The company still had very good clients and good revenues – it was just the overheads that were overwhelming it. We gritted our teeth – and it paid off as the company is now profitable,” he said.
Crimsonwing had embarked on an acquisition strategy which saw it purchase companies which rounded out its offering – allowing it to focus on two main pillars: Microsoft Dynamics through a gold partnership and e-commerce through Magento and Intershop.
“Contrary to what many people think, it is very difficult for an IT company to build software assets from scratch. They tend to see the winners and forget that for each of them, there are many others who have failed. This is why we took a strategic decision five years ago to build on existing vendor solutions,” he said.
Crimsonwing in Malta now has 110 employees versed in Dynamics with around 90 others that are focussing on e-Commerce.
“When a company considers you for a job, they want to know that you have the size and resources to be able to meet their demands and deadlines. Once you have the turnover, and the portfolio, it is much easier to persuade them about your capability, your strength and depth,” he said.
“Even a few years ago, we would not have been able to consider the Mothercare contract, which spans seven countries.”
Its success encouraged the as-yet-unidentified company to invite Crimsonwing to bid for its contract, which will be rolled-out across 54 markets in 20 languages.
The costs in Malta are still very competitive. I estimate that they are at least 50 per cent cheaper than Western Europe for a company that employs between 50 and 100 people
“They are very good negotiators but this is where Malta has an advantage: The costs in Malta are still very competitive. I estimate that they are at least 50 per cent cheaper than Western Europe for a company that employs between 50 and 100 people,” he said.
The situation in Malta is not without its challenges, especially when it comes to human resources, with salaries being driven up by i-gaming companies, and demand for highly-skilled and experienced developers outstripping supply. But Mr Walsh is not overly concerned.
“When Crimsonwing came here in 1998, we recruited aggressively and many IT companies were afraid that we would distort the market. But the reality is that it works out for the greater good as all the activity and dynamism made students realise that there were good career prospects and in time the university, MCAST and private providers all improved their offering.
“Graduates now have much better business-oriented skills and whereas before it used to take months before they became fully productive, now it takes far less time.”
The trick, he believes, is to be a good employer, offering good conditions with appropriate remuneration and careerprogression.
With EBITDA increasing by a staggering 374 per cent in the last financial year, the company is clearly getting things right, delivering more than 21,500 man-days of work to over 100 clients (including numerous Maltese ones) for over 300 projects. It seems 20 really will turn out to be a magic number.