IT services stay in demand through crisis

  • 2010-08-19
  • By Alina Lisina

RIGA - The IT industry continues to develop, even during this economic crisis. This is a worldwide trend, which is present also in Latvia. Companies tend to use outsourcing and ready-to-use solutions, instead of investing in creating their own solutions inside the company.

“There are two services in demand in the IT industry today - optimization and automation. The first helps companies to save time, resources and money, the second - to make processes easier,” said the director of Softikom, Dmitrijs Krasnovskis, to The Baltic Times.

He points out that several years ago, paperwork was normal for many companies; today’s modern company cannot survive without modern IT solutions, which replace most manual paperwork.
‘There are many IT solutions which replace human work. I mean CRM, which helps companies to work with clients, ERP, which helps to manage business processes. It all serves one purpose – to enable the perfect workflow. A manager doesn’t need to meet his 10, or 100, employees to give them tasks, he just puts the task in the system and it delivers tasks to all the people involved in the project and helps to analyze the results, too,” says Krasnovskis.  

He points out that now, not only financial organizations and international companies use such systems, but also small and middle size enterprises start to value them. “In our company the most popular services we sell are optimization of business processes and ready-to-use interactive Web sites, which helps to automize sales,’ he says.
Despite the crisis, he says that his company has increased its profit a little. “The IT industry is the one which almost didn’t face the problems connected with the economic downturn. During the worst year, 2009, Google increased its profit by 20 percent. And this is a common trend also for Latvia,” admits Krasnovskis positively.

This doesn’t mean that IT companies don’t feel the crisis at all. As told to business daily Dienas Bizness, member of the board of FMS, Maruta Galeniece, said they started to prepare for the new market rules before the crisis started. “We had reduced our expenses, so we were ready to work, even in very tough market conditions.” As a result, when other companies had losses, our company worked with a 150, 000 lats (214,200 euros) profit in 2009.
Regarding price level, the prices do go down even now. “There is competition among IT service providers, and also some solutions are available for free. We cannot put a really high price, says Krasnovskis.

Speaking about the software market, some companies see the trend of free software gaining in popularity. “Even IBM chooses to work with Linux. Also, in Latvia, some companies switch to free software,” notes Krasnovskis.
Marketing manager of wholesale software company TVG, Ilze Line, disagrees. “There are many hidden costs in the maintenance of free solutions. It’s not always true that free software is more beneficial,” she warns.
She also says that with software wholesale, there is around a 30 percent decrease now, compared to the situation before the crisis. But in general she describes the situation as positive – anti-pirating actions now have results. There are many fewer companies using illegal software.

All the industry players predict growth for the IT industry this year. As CEO of Lattelecom, Juris Gulbis, said earlier this year at the opening of Lattelecom’s annual conference, the industry will continue its growth even more rapidly after the crisis.

“The recent tendency everywhere in the world is outsourcing. Technology users now have switched from huge investments for concrete needs to paying for the ready-to-use solutions, or not paying if they are not using them. Nowadays, smart people use ready-to-use solutions and they do not invest in them. The time of technology farming is over, and Lattelecom has good offers, starting from the office and working place virtualization in data centers, and ending with IT infrastructure development and support,” he says. 

“I see huge potential in IT services. Huge European funds are available for IT projects, also on the governmental level, several projects are planned, for example, in the healthcare system,” adds Krasnovskis.