Deal Radar 2010: Globant

I seldom cover outsourcing on Deal Radar, but here is one that showcases some interesting trends. And of course, I do have a special soft corner for Argentina!

Inspired by the success the Indian IT outsourcing industry and the growth of that country’s outsourcing stocks, Martín Migoya, Martín Umaran, Guibert Englebienne, and Néstor Nocetti, founded their own outsourcing business in Argentina.

The four friends decided to leave their jobs at multinational companies to start Globant in 2003. A software development and maintenance company, Globant has a wide portfolio and the expertise to serve clients in areas that range from mobiles to mainframes. The company works with the largest companies in areas like e-commerce, social networks, mobile phones, and gaming. Headquartered in Buenos Aires, Globant has offices in the United States, Mexico, Colombia, Chile, and the United Kingdom.

Founded just two years after the 2001 dot-com crash and when the Argentine markets were collapsing, Globant’s market landscape was just taking shape following the economic and political chaos of the previous years. The founders knew that Latin America was the perfect match for the United States. The wide talent pool, the cultural fit, the aligned time zone, and the regulations that countries like Argentina offer to protect data all result in attractive options to outsource IT projects. Twenty percent of Globant’s team works on-site with its customers, while the rest of the team works from its delivery centers in Latin America. Globant feels that a project is done more efficiently because people can communicate in real time during normal business hours.

In 2005, Globant caught the attention of MIT’s Sloan School of Management, which wrote a case on Globant called: “Leading the IT Revolution in Latin America”. Glow, Globant’s advanced software algorithm, can be used to assemble “hyperteams.” Globant’s talent information and management system also takes into account personality profiling, “ongoing 360”, career aspirations, project history, and industry and technology expertise rather than relying simply on résumés to gather the perfect team for a company’s most challenging projects. In November 2009, Glow was named one of the 100 best information technology projects of 2009 by InfoWorld, an International Data Group (IDG) information technology online media and events business.

Globant says that companies choose it because it is adept at “rationally blending” mature and stable open source technologies with commercial software to reduce the total cost of a project. Globant feels that its knowledge of not only software engineering, but also design & usability and infrastructure management and innovation, all of which are of course necessary to make a successful product today. This, along with the ability to combine hard-core engineering, creativity, infrastructure maintenance and innovation; and the company’s specialization in major IT trends, such as gaming, social networking, virtualization, cloud computing, online marketing; are among the factors that Globant feels differentiates it from competitors, which include Sapient, IBM, ThoughtWorks, and Persistent Systems, among others.

Globant’s target segment includes large firms in the UK and the United States, working in manufacturing, consumer packaged goods, travel, telecommunications, finance, insurance, and technology. Its customers include Google, Yahoo!, LinkedIn, Electronic Arts, YouTube, EMC, Sabre, and Coca-Cola. Globant currently has more than 300 active projects.

When Globant started, it had just $5,000 invested by the founders. Two years later, the company closed its first financing round of $2 millionwith FS Partners. In 2007, Globant participated in its second round of $8 million with Riverwood Capital, and in December 2008, it received $13 million from Riverwood Capital and FTV Capital. The company has been profitable since it started and project revenues of $50 million for 2009.

In June 2008, Globant acquired Accendra, an Argentinean software company. Globant stands to benefit from Accendra’s prominent presence in Latin American and its key customers in countries such as Chile, Colombia, and Mexico. The acquisition will strengthen Globant’s presence in the region. In December 2008, the company acquired Openware, a company that specializes in IT infrastructure managed services and offers solutions such as virtualization, infrastructure, network, security, remote access and open source platforms. Openware, which has a wide portfolio of clients in Argentina and in more than 35 countries. The acquisitions have helped Globant reinforce its goal of becoming a a multinational Argentinean company. Globant’s growth strategy is simple: it is looking to open delivery centers in Latin America and hiring more talent from the region. Globant also intends to acquire more companies. Globant itself was a potential acquisition target for an Indian company recently, although parties on both sides would not reveal which one. However, the company now has its course well mapped out and plans to go for an IPO in the next two years.

Suggested Reading:
*eBay of Latin America: Mercado Libre CEO Marcos Galperin
*All Stars: Blue Nile, MercadoLibre, WebMD
*Trend Radar 2008: Emerging Markets

This segment is a part in the series : Deal Radar 2010