Argentine software and IT services firm Globant filed with the U.S. Securities and Exchange Commission this week to raise up to $86.25 million in an initial public offering (IPO). The move is not only a significant step for Globant but also a major development for the larger Nearshore/ Latin America technology industry – which has emerged in the last few years to gain worldwide attention as a multi-faceted region offering a surprisingly deep amount of tech-driven services. The IPO is more or less in line with a rough estimate Globant CEO Martin Migoya made during a Nearshore Americas interview in 2011, although at that time the expectation was that Globant would list on NASDAQ.
Globant arrival on the New York Stock Exchange would mark a first for an Argentine technology firm, and only the 14th company from the country to be traded on the exchange. Trading under the symbol GLOB, Globant develops software and provides IT services for clients such as American Express, Coca-Cola, Disney, Electronic Arts, Google, JP Morgan Chase & Co., LinkedIn, National Geographic and Zynga.
Commitment to be Innovative
In numerous conversations Nearshore Americas has had with Globant customers in recent years, the prevailing theme heard from these clients is Globant is deeply committed to innovation and aims to offer a sharply distinct alternative to what is commonly described as a ‘body shop’ model where providers take orders but offer little input to project design and ideation. The story of the foundation of the company – where four college friends re-united in a bar after having served several years in global technology roles – has become somewhat of a legend among tech entrepreneurs in South America who continue to seek inspiration for their own dreams.
It is Globant’s deep devotion to entrepreneurship – as expressed through its long time association with Endeavor – that seems to have been what has kept the four founders deeply engaged in the business instead, as has been suggested in other media, of selling out and living a jet-set life without the burdens of running a startup.
From the start, Globant sold its services as an alternative to Indian firms and began serving the US and European markets, with no local customers – an atypically global strategy for a Latin American ITO company at the time. “In the case of Globant, we really backed their international focus and amazing management team,” said Francisco Alvarez-Demalde, Founding Partner at Riverwood Capital (a major backer of Globant) in a 2011 interview.
Over the last decade, Globant has established itself as an international leader in the creation of innovative software products and technology services that appeal to global audiences and can be readily applied to digital marketing campaigns.
Globant combines open-source and proprietary software, which brings flexibility while reducing both risk and costs. Renowned both for developing software, including games, social networks and mobile apps, and services such as cloud computing, big data and e-commerce services, it has become one of today’s most in-demand ITO firms for multinational organizations. It now employs around 3,000 engineers, developers, marketing specialists and designers in 21 offices across 14 cities in Argentina, Brazil, Colombia, Uruguay, the United States and the United Kingdom.
Buoyed by several rounds of major investment capital, Globant has significantly expanded its operations in recent years, fueling speculation that it was planning an IPO on the US stock exchange.
In March 2012, Globant announced that famed entrepreneur, investor, and author Reid Hoffman, the founder of LinkedIn and an early investor in Zynga, had joined its board of advisors.
Five months later, the firm announced that it would commence providing services to Motorola Solutions and would absorb Motorola’s Development Center Operations in Cordoba, Argentina. Then, in October 2012, Globant expanded into Brazil’s growing IT market by acquiring São Paulo-based technology firm TerraForum for an undisclosed fee.
In January this year, British advertising agency WPP bought a 21.5% stake in Globant for $70 million. Globant posted revenue of $71.1 million for the first half of 2013, up 26% on the same period last year, while revenue for 2012 was $128.8 million, 43% higher than in 2011.
Globant’s arrival to the New York Stock Exchange is not free of risks, of course. The firm noted in its filing that further deterioration in the Argentina economy as well as employee attrition are ongoing operational risks. On the issue of Argentina’s economics, the lion’s share of operations for the company take place within Argentina – however part of the growth strategy clearly has been to diversify into other markets, such as Colombia and the United States.
Globant’s presence in the Latin America tech services marketplace has also become a benchmark for other services players, striving to define their niche. Some firms have pointedly decided to maintain smaller numbers – and have been selective about the type of projects they take on. Others have been inspired by Globant’s consistent ability to win business from well-known ‘logos’ – and have sought to emulate some of their sales and marketing practices.
Without question, the Globant IPO will further legitimize Nearshore outsourcing by bringing more interest into the region and causing major customers to seek deeper insight into what triggers the innovation gene prevalent in so many parts of Latin America.