Interview with market researcher and software development trends in Central and Eastern Europe, Eugene Schwab-Chesaru

On duty, I interviewed a person who has been engaged in market research for many years, trends in software development and IT services in Central and Eastern Europe, 15 of them in Russia. And although the interlocutor, in my opinion, left the most interesting “behind the scenes”, nevertheless, this story can be both curious and inspiring. See for yourself.

Eugene, hello, first tell me how to pronounce your name correctly?

In Romanian - Eugen Schwab-Chesaru, in English - Eugene, in Russian - Eugene, in Moscow, in Russia, everyone knows me as Eugene from PAC.

You worked a lot with Russia. Could you tell us about your experience?

I started working at PAC over 20 years ago. Conducted market research of strategic consulting services on the software and IT services industry in Central and Eastern Europe. Key countries of this region: Russia, Poland, Czech Republic, Slovakia, Hungary, Turkey and Romania, we also worked a lot with the markets of Ukraine, Bulgaria, Serbia. Our office in Romania deals with Central and Eastern Europe, and I have been managing this office for over 20 years.



We started working with Russia 15 years ago, then we held 20-30 meetings in Moscow, and several in St. Petersburg. Since then, they have been in contact with Russian players in the field of software and IT services, especially among large and medium-sized companies. We also contacted many offshore IT companies, some of them from Russia, and some very famous in Europe, USA and around the world.

What is the essence of your work, what do you do?

We are in the middle of what is needed for strategic marketing of IT companies. This is market research, market analysis, competitive analysis, up to the forecast and strategic recommendations for companies involved in software and IT services. This is the core of our business, something that our company has been doing for 45 years in Europe and around the world.



Over the past 10-15 years, we have worked a lot with users - both on the part of companies and investors. This applies to the markets of software and IT services, directions and players. For example, IT directors ask us to present them with a picture, our understanding, as well as forecasts about the development of various technologies in different markets, about the positioning of different companies in specific areas, technological areas, or in a particular business.



For investors, everything has accelerated over the past five to six to seven years, so many private investment funds, fin. institutions come to us with a request for advice on the best areas for investment. Or, when they already have some purpose for the acquisition or for the project, they ask our opinion, which is actually an analysis of the business plan of this business in the context of the market. Based on our understanding from the western side of the world and from the eastern side, we can support them in making the right decisions for future investments and evaluate the return on investment for the companies in which they are included, as well as the value of the company they are aimed at.



This is a specific approach, but ultimately it comes down to knowledge of the market, to trends in terms of technologies and types of services, analysis of supply and demand. Therefore, we believe that in Western and Eastern Europe at each point there are three coordinates:

1. Code, software product or IT service
2. Vertical, for example, banking or manufacturing or public sector, etc .;
3. A geographic coordinate, such as a region or country, or a group of countries.

In order to be able to provide all this, we are in constant contact with IT companies, and IT decision makers. We conduct an extensive survey with several partners, especially in Western Europe, the USA and around the world, but also in Eastern Europe (to a lesser extent because of the size that you can imagine).



We conduct this survey every year because we want to make maximum use of the current state of development of the strategy and IT budgets and user-side behavior. We ask in detail, especially on hot topics: cybersecurity, digital customer interaction, cloud computing, the Internet of things, services related to business applications, combined with cloud platforms, cloud migration, etc.



On all these topics, we receive very valuable information from decision makers regarding their intentions, plans, budgets, and also the phase at which they are in the project that they started several years ago.



This is also part of what we are doing. And another component that is unique, especially for Western Europe, for Germany and the UK, is our database of tariffs and prices. Every year we monitor tariff changes in companies, especially in Western Europe, I mean large and medium-sized companies with headquarters in Western Europe that are willing to pay for many types of services under various types of agreements, so we have databases with tariffs, some of which we offer according to our research program.



I said that the database is unique because there is no similar analysis on the market, with three components: in-depth analysis on the provider side, user-side polls and the rates database, in which we actually have both local rates and offshore rates, for example, from India (and we analyze both sides separately, because it is not logical to calculate the average value between them: the cases of their application are different).



We hold a holistic view of the software and IT services industry, this is what we offer in Eastern Europe and are trying to do in Russia.

I know that in November in St. Petersburg you will make a presentation entitled “Trends and Opportunities in the World Software and IT Services Industry”. What will the report be about? Will you share your research?

Yes, we are going to share the latest result of our survey and our conclusions: what are the most important areas that will develop in the software development and IT services industry. Our survey has a long list of 20-30 topics that we offer during interviews with decision makers in the field of IT, and as a result we get 10-15 areas that are first on the list and mentioned more often. On these topics, we will delve into the details.



We would also like to share how we see Russian companies that want to be successful around the world, which we consider to be the right strategy, the right approach in the Western world. I would like to emphasize the key difference between buying behavior in the domestic market in Russia, buying behavior in Eastern Europe as a whole, and the most important buying behavior in the Western world. The segregation is quite high, and it is very important not to lose time and money, to understand these differences from the very beginning and to approach the services and markets correctly depending on their maturity, on their, say, plans, from the point of view of investments. I hope I can show it.



I can talk about this topic for hours, but I will try to give the most valuable in half an hour, and then discuss with those who show interest.

When you work, communicate with people from Russia, is this different from communicating with people from other countries?

The people I met are middle and senior managers. They are well versed in what is happening in the world. At the same time, when comparing Russian IT executives with similar executives, for example, from Poland, the Czech Republic or Romania, I feel that Russian executives are proud that they are from Russia and that their local market is potentially full of opportunities.



But if they decide to enter the international market, they plan to expand quite widely. If, for example, you are talking with someone from Poland, with a company that works in the Polish market and wants to succeed also in Germany, the UK, Belgium or the Netherlands, they will talk about small steps, that then first try.



And if you have the same conversation with the Russian leader - he is confident of his success in major transactions, even directly with major players in Western Europe. They are used to dealing with large organizations. This is very powerful, I think it is a very important condition for success, because today everything happens very, very fast in the IT industry. And if you planned small steps to enter the foreign market, at the end of the day you will be surprised, because when you “mature” in three years, the conditions will differ from the moment you started implementing the strategic plan.



Therefore, I believe that it is good to make decisions quickly, take risks, and I feel that Russian companies, at least most of the companies I have met in Russia, have such an attitude, and if they want to expand abroad, they are pretty straightforward and want to go pretty fast.



On the other hand, I have met quite a few heads of Russian companies who say that they do not need to expand abroad, that the Russian market is enough for them, that there is a lot of work in Russia, and I completely agree with them. The Russian market is full of opportunities, full of people, and this is only the beginning of the development of IT, if we compare the GDP with the total income from all companies in Russia. Therefore, I fully understand companies that are focused on the domestic market and do not spend time and energy searching abroad. There are different options, different business plans, and many paths can be successful.



But taking into account the competitiveness, very good reputation of technical specialists from Russia, success stories in the IT sphere of a number of companies, projects and individuals, immigrants from Russia, it would be a pity not to use these resources for global projects, from which Russian companies can also learn a lot : business processes, methodologies, and experience that they simply cannot yet get on the domestic market.



Such a combination is beneficial, but we never say that we have a single correct strategy, that we came up with a template and give it as an ideal solution. No, everything is individual in each specific case, and any business goal, strategic goal can be good if it is carried out correctly, and if it is correctly set in the context of the market, demand and supply.



And yet, of course, the most important component today is human resources, the right skills. I see an industry that drives, in fact, industry and the market as a whole, and firmly believe that Russian companies can be much more visible in Western Europe. In general, when I think that about half a million IT engineers are not enough in Western Europe today, and if we count all the projects that were not completed due to lack of resources, if I look at the price growth rates and huge plans for digital transformation of almost all organizations in Europe, the USA, I can say that there is no limit for companies that really have the right technology and the necessary skills, and are serious about implementing projects in areas where demand is high today.

Thank you for taking the time for this conversation, what would you like to wish our listeners?

I hope that you will have many ideas, and many answers to questions, and - why not - even more willingness to develop, invest and believe in the future of the entire IT industry in Russia and the whole world.



Questions asked: Julia Kryuchkova.

Interview date: September 9, 2019.

NB This is an abridged version of the interview in translation, the original is in English here .