The Brazilian unit of German database solutions provider Software AG is on track to reach 30mn euros (US$38.6mn) in revenues by the end of its first year of operations, company president for Argentina and Brazil, David Powell said in a press conference.
The unit has 60 employees and expects to end the year with 70.
"I was impressed with the quality of professionals we have recruited in Brazil. We managed to recruit some of the top professionals available in the market and it is one of the best teams we have in the world," said Software AG board member and COO of the western region, Mark Edwards.
The company recently invested US$1.5mn to move into bigger offices in São Paulo, with office capacity for 100 staff.
In 2008, the Brazilian office closed over 30 deals with large companies present in the country, including a 63.7mn-euro deal with Banco do Brasil (BB).
Regarding mergers in the Brazilian financial sector, with two recently made announcements of BB acquiring São Paulo state bank Nossa Caixa and privately held banks Itaú (NYSE: ITU) and Unibanco (NYSE: UBB), Software AG sees opportunities in the banks' integration process, especially considering that BB and Nossa Caixa are in the company's client portfolio.
Last year, Software AG ended the contract with local distributor and former partner Consist, after which the latter kept the names of its customers under wraps in accordance with an international court decision. Since then, Software AG has been identifying the clients in Brazil and Argentina using its systems.
"We had to go and find the customers, which was a big challenge, but we have made a huge amount of progress. We have been holding events throughout Brazil with clients and had over 800 people attending in the different areas of the country," said Powell. "It is one way of presenting our direct operations to clients."
According to the executive, clients in Brazil are now starting to appreciate the value of a direct relationship with the vendor.
In Argentina, the company's expectations are lower than for the Brazilian unit due to the smaller size of the country and therefore lower demand.
"We have closed deals with six or seven customers this year in Argentina. In some ways, the business there is similar to Brazil, but there are fewer and smaller customers. We support Argentinean clients through our global network, which is different from Brazil, where we need local staff speaking Portuguese," said Powell.
According to Software AG Brazil and Argentina marketing director Célia Alves, the Argentinean unit is expected to see US$5mn revenue this year.
Globally, the company expects to see 710mn-730mn euros in revenue this year, compared to 620mn euros seen in 2007.
Latin America currently represents 8% of the company's overall revenue. The Americas represent over 40% of the total.
"Next year it will be our 40th anniversary. Depending on where we finish this year, we expect to grow between 4% and 8% in 2009 [globally]. Due to market conditions, it is quite a tough goal but we have been within our guidance for the past 26 quarters," said Edwards.
By 2011, the company expects to be a 1bn-euro company, which is expected to be achieved through both organic growth and acquisitions. By the same date, Brazilian operations are expected to reach US$100mn in yearly revenue.
Despite the ongoing global financial crisis, the company remains optimistic for its businesses in the Latin American region. Furthermore, according to Edwards, about 60% of the company's overall yearly revenue comes from software upgrades, long-term contract professional services and maintenance, which represent ongoing deals.
Also, the company does not focus on one sector exclusively, therefore even if the financial market has lower investments next year, other sectors will continue investing in technology.
"The financial segment represents 20% of the Software AG global business, while government represents 30%, for example," said Edwards.
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