From Russia With Love for IT: How Will Softline Fare in Foreign Lands?

With Latin America increasingly becoming a rich target for maturing IT services, a little-known Russian IT company is quietly expanding into the region, setting up offices in one …

With Latin America increasingly becoming a rich target for maturing IT services, a little-known Russian IT company is quietly expanding into the region, setting up offices in one country after another. In little over four years, Russia’s Softline Group has expanded into six countries – Venezuela, Colombia, Peru, Argentina, Costa Rica and Chile – and is currently hunting for new facilities in six more nations including Brazil and Mexico.

Given the speed at which it is expanding, the company will have covered the nearly entire region over the next two years. Expansion has become its mantra as the company pursues a target of doubling its annual income from the current $600 million to $1.13 billion by 2013.

Its latest office was set up last week at Oak Square Center in Escazu, Costa Rica, which the company says will serve as a hub for its operations in South America and the Caribbean.

“We entered Latin America in 2008 launching an office in Venezuela. This is our new office,” said Meli Figueres, Softline’s CEO in Cost Rica.

Expansion Drive

Softline says it is in the process of expanding into Panama, Puerto Rico, the Dominican Republic and Ecuador, and will start operations in Mexico and Brazil over the next two years.

“We have a full spectrum of IT services on offer, including consulting, technical support, virtualization, cloud and Saas,” says Figueres.

She refuses to name its local clients, but a list of customers posted on its website includes names like British American Tobacco, Coca-Cola, Samsung Electronics, Siemens, VTB24 Bank, Alfa-Bank and JSCB Rosban.

According to market research firm IDC, Latin America has a $40 billion unexplored market for information technology services. And the IT spending in the region is expected to grow at over 10 percent annually over the next four years.

Such predictions go well with Softline, because most of its income comes from reselling (licensing) software like Microsoft Windows and Office. As of now, the company is bolstering its base in Latin America and waiting for the local businesses to loosen their purse strings to go high-tech.

Founded in 1993 by Igor Borovikov, Softline has agreements with a large number of US technology giants to resell their software. But the company does not like to limit itself to vending software developed by others.  Borovikov has recently launched a venture capital fund aiming to invest in R&D centers and companies that develop software.

Though Softline has several offices, its headcount does not seem to have exceeded 100 employees in the region. Today there are about 12 people working at its headquarters in Costa Rica.

In Latin America, the company is headed by Igor Petlyakov, a Russian native who was an employee at the Russian consulate in Argentina until few years ago. Analysts say it is he who inspired the company to expand rapidly in the region. His leadership seems to have worked well, because Softline has already snapped up several contracts from government agencies in Peru and Argentina.

Sign up for our Nearshore Americas newsletter:

According to a few Spanish news papers in Peru, Softline’s clients include ProInversión, Ministry of Health, Ministry of Interior, Osinergmin SUNARP, BCRP, ONP, National Library of Peru, among others.

Outsourcing and Contact Centers

Softline’s overreliance on software vending may dent is profit in the days ahead as more and more people begin purchasing software directly via online. And Softline, it seems, is aware of it. Therefore, the company has started offering contact center services and IT infrastructure outsourcing services in Latin America.

“We have a contact center in Colombia and it caters to the need of the SMB segment in the region,” Figueres added. In Russia, Softline is also developing software, but this segment makes up just 5 percent of its overall business portfolio.

As of now, software delivery accounts for 40 percent of its business and a 50 percent of its income is generated in Moscow alone.

“We have 1900 employees worldwide and operation in 24 countries. Moreover, we represent more than 3000 brands” says Figueres.

It is, however, true that Softline has a strong network of clients in the Russian Federation and in the breakaway republics of Soviet Union. But how the company will perform in a region far away from home is only future will tell.

Tags