Crisis-born Stefanini plans European expansion

Marco Stefanini founded the IT services company that bears his name back in 1987, in his bedroom in his native Sao Paolo, Brazil. It was a time of deep economic crisis for the country, characterised by astronomical rates of inflation.

"Brazil was very different back then, it was very, very tough," he recalls. "We had very high inflation and no investment."

He began offering IT training services to local companies, and the Brazilian divisions of multinaitionals including IBM and Johnson&Johnson. "For the first five years, we were a very small company," he says. "We did consulting, and a small bit of outsourcing, but we mainly offered training."

But in 1993, things began to take off. "I invested all the profits in the company and by then I had more experience at selling and management," he explains. "In 1993, we were a $1 million company. Two years later, we had multiplied that ten times over."

Since then, Stefanini – which now focuses on IT services and business process outsourcing – has grown by an average of 25% each year. Much of that growth was organic, but in 2010 it began international expansion through acquisition, most notably US company TechTeam. Today, Stefanini has annual revenues over $1 billion.

Having emerged from one economy in crisis, the company now plans to crack another: Europe.

As domestic IT services providers watch their revenue growth rates and profit margins drop to the low single figures, and with US giants consistently rating Europe as their most troubled market, some may question the wisdom of this strategy.

"I met Gary Cohn, the COO of Goldman Sachs, and he said ‘Everyone from the developed world is trying to get into the emerging markets, why are trying to do the opposite?’," says Stefanini. "But Europe is the second biggest market in the world, and it is a mature market, which means it buys a lot of IT services. In developing economies, companies are still investing in hardware."

Besides, he says, compared to Brazil’s troubles in the 1970s and 1980s, "it is a soft crisis in Europe."

Breaking paradigms

"A crisis can offer a strong opportunity," he says. "Large corporations don’t like to change, especially in Europe. But in a crisis, you must change. That’s an opportunity for us to enter the market with a different proposition."

That proposition, Stefanini insists, is not to compete solely on cost. "Our industry doesn’t have high margins, except the Indian companies. So if we are aggressive only on price, we will not be in a good position long term."

Instead, he says, it is to "do thing differently, to break a lot of paradigms".

With resources in India, Brussels, Sweden and Romania, and employees embedded on customer sites, Stefanini can offer a hybrid of onshore, near-shore and offshore resources, he says.

 "I try to insist on a model that is not only offshore," Stefanini says. "I believe we can offer a good cost-benefit proposal when we have part of the team in a near-shore or offshore location, but also a team together with the client, so we can feel where their pain is."

The company’s structure also differentiates it from local providers, he says. "We are not a hierarchical company, we don’t have a lot of middle management. That’s very important, because not only can we be cheaper but more flexible and agile. When there a lot of levels [of management], you become very slow."

Stefanini says that instilling this culture at the European sites it has bought, mainly through the Tech Team acquisition, has been his biggest challenge. "I prefer to convince people of what our model is and why it can be successful," he says. "But sometimes we are obliged to be a bit stronger and change some of the people."

The company already has a number of customer engagements in the UK, mainly providing local services for multinational corporations including Heinz, Land Rover / Jaguar and Ford. Stefanini’s ambition, however, is to be a global partner for this calibre of company – another reason to crack Europe.

"If we want to be a global partner, we must be close to their headquarters. Even in our own market, the selection for their Latin America IT services will be made at the headquarters, and if they haven’t heard of me, I could be out – even if I provide great services."

Stefanini gives the example of pharmaceuticals giant GlaxoSmithKlein, who it provides IT services in Latin America. "If we have any ambitions to be global, we have to be close to them here."

Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics