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• 2007

S&T ready for further double-digit growth

Thanks to favorable economic trends and consolidation in its core markets, the Vienna-based IT specialist expects revenue of over €750 million by 2010.

First steps in 2008 to 2010 goals

According to Rosner, the S&T strategy focuses on a number of clear goals to be achieved by 2010. They include doubling the company’s Managed Services and Business Solutions areas through organic growth, new services and acquisitions, as well as ensuring organic and profitable expansion of the Enterprise Systems division. The IT company plans that Managed Services and Business Solutions will account for over 60 percent of its revenue within the next three years. “If we reach our targets by 2010 we can expect more than €750 million in sales, increase our profitability and employ over 5,000 specialists. We expect these plans will positively influence our share price as well,” the CEO said.

Beyond overall economic growth in its core markets, S&T also expects to benefit from market-specific trends in coming years, including an increase in midsized enterprises in Central and Eastern Europe (CEE) countries and continuing foreign direct investment in emerging markets. “While our core markets are continuing to expand at an impressive pace, foreign direct investment, funding from the EU and an increase in the number of midsized enterprises will boost this growth significantly,” Rosner said. In addition, shortfalls in specialists will also force businesses in these markets to automate their processes even further, also driving demand for IT services and solutions especially in the manufacturing, trade and financial services industry.

As for overall market development, analysts expect economic growth in Eastern Europe in 2008 to range from 3.1 percent in Hungary to 6 percent in Ukraine. Even more substantial upswings are seen for Turkey, at 6.5 percent, and China, at 10 percent. Analysts at PAC (Pierre Audin Consultants), for example, expect that the retail industry will invest above-average its IT, in order to upgrade connectivity with outlets and harmonize network landscapes that have grown more complex in recent years. For example in Germany sales in software and IT services are expected to rise among wholesalers from some €600 million in 2007 to €800 million in 2011, with an increase from €600 million to €700 million in the food industry and from €1.2 billion to €1.5 billion for non-food producers over the same period of time. Within the financial services sector, insurance companies will also come under growing pressure to optimize processes in order to increase profitability, while manufacturers and suppliers in the automotive industry will be forced to streamline their supply chains and tighten their networks to achieve better cost-effectiveness in light of increased global competition.

China is expected to play a key role in S&T’s medium-term performance. “While we can most likely double our business in other growth markets, China offers us the opportunity to grow at n times that amount,” Rosner said. According to market researcher IDC, the Chinese IT sector is forecast to expand by up to 20 percent each year through 2010. Currently, S&T supports European, especially DACH, and local Chinese companies active in the country’s import/export and manufacturing industries. “Our performance in China, as elsewhere, is based on the strength of our local teams,” Rosner said. “They know the customers, the local markets and our partners, which is a key prerequisite for implementing S&T’s overall business strategy.”

Business streamlining a plus

In addition to market growth and strong foreign direct investment, S&T expects its performance to be fueled by the ongoing focus companies in a range of sectors are putting on optimizing their business processes through the use of state-of-the-art IT. In today’s increasingly competitive environment, both established and up-and-coming companies want to become more cost-effective through outsourcing, for example, and by implementing current global IT standards, including service oriented architecture (SOA) as well as Business Intelligence and CRM solutions, among other tools.

According to IDC, for example, the market for SOA services is expected to grow from $6.3 billion today to $32.7 billion in 2010. A study released in October by Equaterra also expects that business process outsourcing (BPO) in Europe, the Middle East and Africa (EMEA) will post strong growth in 2008, in particular because it is less developed there than in other markets such as North America. Given such trends, S&T expects demand for its IT services to remain strong, especially in key markets such as CEE and Asia.

Focus on mid-term profitability

Although the company is growing rapidly, its focus is not on expansion only. “We’re more interested in achieving our 2010 strategic targets than in pure revenue growth at any price. It’s about the quality of growth, not just quantity,” Rosner said, explaining the company’s long-term strategy.