Thank you for taking the time to do this interview with us, Michael. Can you start off by giving us a short introduction about yourself and why you founded Wirtek back in 2001?
– I would probably be described as a passionate IT nerd, who has been working in the IT industry for almost 30 years.
Back in 2001 I founded Wirtek as a spin-off from Nokia. Since Nokia was going through significant organizational changes at that time, I seized the opportunity to make a deal with Nokia that created the foundation for building up Wirtek.
As for my educational background, I have a MSc. in Computer Science from Aalborg University in Denmark and a Diploma in Management from Henley Business School in UK.
The IT outsourcing market has probably changed a lot over the course of 20 years. In your experience, what have been the biggest changes?
– Today there is a significantly wider understanding and acceptance of the value of an IT outsourcing company can contribute with besides just providing “brains and hands”. Adding flexibility and competencies are equally, if not more, important today.
And while cost was the main factor for outsourcing 20 years ago, this is no longer the case. Today we often see that it cost is only one of many factors that impact the decision process – to a greater extent it is a question about de-risking the access to talent and experienced employees.
On average, Wirtek has a client seniority of more than six years and many clients have stayed with you for over a decade. What is Wirtek doing so well that clients never leave?
– The main reason clients have chosen to stay with Wirtek is overdelivering on expectations - that we meet and often even exceed the level of service that they expect. And since we often become an integral and critical part of their own development and test departments, it is very difficult for the client to change to a different partner. And we just make sure not to give them any reason to do so. Today we have several clients that been with Wirtek for more than 10 years.
During the last few years, Wirtek has delivered rapid growth and increased profitability substantially. What are the main reasons behind this development?
– We have delivered profitable double-digit organic revenue growth for several years and in January 2021 we launched our 2025 strategy also focusing on accelerating growth by acquiring well driven companies with a proven track record and a healthy corporate culture. The CoreBuild acquisition in April 2021 is a good example of this.
Our business model allows us to increase our revenue faster than our cost base which results in increasing profitability. Our operational efficiency has increased markedly, with the percentage of billable personnel increasing from 82% in 2020 to 87% during Q1 this year. This has a strong positive effect on the profitability of Wirtek.
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Wirtek is aiming for 130 MDKK in revenues by 2025 and acquisitions is an essential element of your growth strategy. How would you describe the typical target firm?
– We are looking for acquisition candidates that first of all will be a cultural fit for Wirtek. In addition, we have a number of acquisition criteria which an acquisition candidate must satisfy to be considered a relevant candidate. The actual criteria are not public information but are related to supporting the goals of Wirtek’s Accelerate25XL strategy.
As of today, do you consider shortage of IT talent to be the biggest issue for an IT outsourcing company such as Wirtek?
– Absolutely. There is so much digitalization going on that there is a significant shortage of IT talent. Employee retention rate is actually one of the operational goals of our Accelerate25XL strategy. We are focusing on building a strong HR organization and have hired a very experienced HR Director to head our recruitment and retention efforts. We are working hard to ensure that we can meet the Accelerate25XL financial goals despite the current shortage of IT talent and have been lucky to differentiate with our incentive schemes – awarding employees with Wirtek shares. And, fortunately, we have many colleagues that have been with Wirtek more than 10 years.
One of your operational goals is to have one source location outside Romania by 2025. Are there any specific countries that you find interesting?
– Certain locations are more interesting than others. However, this is not information we can share at this point, but what I can explain is the reason why we wish to expand with sourcing locations outside Romania – it is anchored in a risk mitigation approach of improved opportunities to recruit talent.
Where do you see Wirtek in 5 years?
– I see Wirtek as a much larger and very profitable IT outsourcing company that is known in the market as a key enabler for our clients to succeed with their products and services in their markets. If we can achieve this position and gain that image, then there really is no limit to our potential growth. And then of course I see Wirtek listed on Nasdaq Main Market.