Internet specialists carve out niche in an outsourced world
BUENOS AIRES — With $5,000, computer talent and a hefty dose of confidence, four 30-something engineers launched Globant as an effort to create a Silicon Valley-like company in the tradition-bound and crony-laden business world of Argentina.
Convinced they could replicate the success that Indian companies were having with information technology development, CEO Martín Migoya and three friends cobbled together the cash, quit their respective jobs at multinational technology companies and formed Globant in 2003.
The team of Migoya, Martín Umaran, Néstor Nocetti and Guibert Englebienne opted to specialize in the next generation of Internet applications by developing software for the booming areas of social networking and games. Umaran took the job of chief operating officer, Nocetti became vice president of innovation labs and Englebienne was named chief technology officer.
Eschewing the buttoned-down atmosphere typical of Buenos Aires, the four young men emphasize a corporate ethos of hard work and open exchange of ideas in a headquarters that features a “chill-out zone” and ping-pong tables, creating an environment more likely to be found in northern California than the Southern Cone.
The staff’s slacker garb of baggy jeans and untucked shirts belies their results. Globant’s client roster has grown to encompass Coca-Cola, Electronic Arts of New York, Silicon Valley social gaming company Playdom and the U.S. business-networking site LinkedIn. Globant was also one of a handful of international companies to develop software for OpenSocial, a Google-led effort to create a programming interface to allow social networking software to interact across multiple websites.
In a country that has suffered from brain drain and where business owners chose to sell out during the 1990s rather than seek regional expansion, Globant is trying to create a model for other entrepreneurs by building at home.
“Argentina lacks home-grown multinationals,” said Migoya, who often speaks about entrepreneurship to Argentine university students.
“I am very Argentine. I like our country,” Migoya said. “We know the problems that we have in Argentina. But we also know the type of value we can contribute to the country by creating a company like this.”
Venture capital and other support have been crucial. Two years after they started up Globant, the four partners raised $2 million from Argentine angel investors managed by FS Partners. In 2007, the team obtained $8 million from U.S. venture capital fund, Riverwood Capital, a rare endorsement of an Argentine start-up by U.S. venture capitalists. A year later, as Wall Street and the world economy were in a nosedive, the company secured a second round of $14 million in financing from Riverwood, headquartered in Menlo Park, California; and FTV Capital, which has offices in San Francisco and New York.
That cash infusion helped Globant launch a series of acquisitions. In 2008, it purchased the Buenos Aires-headquartered Accendra, which had cultivated a strong relationship with Microsoft that Migoya wanted to leverage. Also that year, Globant bought Openware, based in the city of Rosario. Migoya said Openware had expertise in infrastructure and security software; as a result of the deal, consulting firm Deloitte & Touche became a Globant customer.
Globant’s focus has fueled impressive growth rates. Revenue doubled annually through 2007. In 2009, Globant registered a 10 percent increase as sales rose to $42 million. The company expects to hit $52 million this year.
With Accendra and Openware, Globant today employs 1,600 people and has opened offices in Boston, Silicon Valley, London, Mexico City and Bogota. Migoya said he expects to close on the purchase of a third Argentine start-up within two to three months. The company is looking for additional acquisition opportunities.
Globant faces competition from Indian companies like Tata Consultancy Services, which has a strong presence in Latin America, or Wipro, which has plans to expand. More competition comes from regional leaders, like Mexico’s Softtek, which has an office in Buenos Aires. Migoya maintains that Globant, with its focus on specific areas, does not compete directly with those other providers, which emphasize full-service outsourcing.
The team is also considering taking Globant public in the next two years.
The IT developer may well be an attractive acquisition target itself. Migoya says that’s not part of the plan. “We have never discussed that because that would change every single decision we have made until now to grow the company,” he said.
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