Lights and Technology
31 August 2022

Noesis believes that technology services "won't suffer as much from recession"

Financial director of a Portuguese technology consultancy explains that companies will continue to need digitalization despite the crisis and cases like Remote are "specific" to the post-pandemic period.

By Luís de Castro, Chief Financial Officer da Noesis

The technological consultancy company Noesis foresees that until the end of this year, its international operation will represent 50% of the total turnover, a goal included in the Strategic Plan of the company until 2023. In an interview with Jornal Económico (JE), the financial director of the Portuguese multinational says that the intention is for the various geographies to become technological hubs and have larger teams - to serve the surrounding regions. Still, he rules out in the short term the investment in Asia and the opening of more branches.

"We anticipate the strategic goal of having 40% of the business international in one year. There are some data that we cannot yet say because we are part of a listed group, but we will reach this goal in 2022", guaranteed Luís Castro. Last year, the international market - Brazil, Spain, Ireland, the Netherlands and the United States - represented over a third (34.8%) of turnover in 2021, after a growth of 16% compared to 2020.

In Spain, the plan is to increase the number of projects developed to leverage synergy with Altia; in the Netherlands, the idea is to strategically position the office and allow it to function as a technology centre to provide services to clients throughout the Benelux region and Nordic countries; Ireland will be used to hunt for clients in the United Kingdom and the United States - which serves the whole of North America - will be the main target for the next two to three years in terms of strengthening the local structure.

The reinforcement now announced is easy to explain in 2020 Capgemini's competitor was bought by the Spanish group Altia for over 14 million euros. The transaction allowed the national company to invest in all markets simultaneously. "Before, we had to be much more careful in the development of a certain market, " says Noesis's Chief Financial Officer (CFO).

"A Spanish group acquired us, but there was no cannibalization of the business. Altia is very focused on the Spanish market and works with European agencies. Financially, it was not the sum of two balance sheets or the sum of two income statements, but rather a multiplication", says the spokesperson of the company that sells cloud infrastructures, cybersecurity solutions, process automation, data analytics, Artificial Intelligence (AI), application development or quality assurance services.

When questioned about the slowdown in recruitments and even divisions in dozens of technology companies, such as Remote, Netflix, and, more recently, Robinhood, Luís Castro tells JE that they do not doubt that "the recession is here", but he is confident in the positive impact of the need for digitalization by organisations. "I'm not saying that it will be ignored, but I believe that we are in a sector of activity that, due to the need to develop processes and automation, will suffer, although not as much as others. In the services sector, where we operate, I do not believe that the wave of redundancies is a reality today. Why is that? We have a labor shortage in IT, and we have to pull our heads to invent new ways of attracting and retaining talent," he says.

Talent that requires financial investment. The CFO states that the company is attentive to what an "increasingly polarised" market offers, especially the most significant competitors. "Hiring a new employee reflects the market adjustment. We tell our employees that the salary is one of the most important parts, if not the most important, but everything else too: professional development, the balance between personal and professional life. According to Luís Castro, Remote "turned out to be a unicorn coming from the pandemic, with a particular service connected to digitalization and the fact that we are spread all over the world". Perhaps this is why Noesis does not believe in the concept of 100% remote work.

In 2021 - the year in which it had a record turnover of 49.5 million euros, which represents a growth of 12.1% about the first year of the pandemic - the areas with the highest per central growth in business volume were low code solutions / Outsystems technology (+19.6%), quality management and automation (+15.5%). The EBITDA margin (earnings before interest, taxes, depreciation, and amortization) was 6.1%, advanced the CFO, "something that, historically, had not happened for some years".

Luís Castro ensures that all industries are pursuing a digital evolution path, although "if we were talking about two years ago, clearly there were sectors that were differentiated from the point of view of investment in information technology (IT), such as retail and telecommunications".

"We consider that we are very well equipped when looking at digital transformation because we can provide services almost from infrastructure - obviously with partnerships with installers (Fujitsu, for example) - to the most sought after in the market, the low code solutions, Agile, RPA [Robotic Process Automa tion] and cybersecurity, which - as a result of the attacks - have been very pro ducted," he says.

In terms of structure, Noesis is organized in the following way: in Portugal, it has offices in Lisbon, Coimbra, Porto, Proença-a-Nova, and in Guarda and Covilhã (the last two are areas in which it invested at the end of last year) and then it has several loyal entities in the three countries besides Portugal and Spain, for which around 70 people work out of the 965 the company employs today. The results of Noesis in 2021 also contributed to the annual accounts of the Spanish group Altia, which is listed on the BME Growth index of the Madrid stock exchange. It saw its profits increase from 6.2 million euros to 8.7 million euros in one year and EBITDA grow 16.8% in year-on-year terms. Turnover reached 125.9 million euros in 2021.


Published (in Portuguese) in Jornal Económico