Bulgarian software developer Sirma Group Holding [BUL:SGH] has an ambitious strategy for regional expansion and structural improvement, aiming to boost profit growth and efficiency ahead of a dual listing on the US stock exchange, its CEO Tsvetan Alexiev said.
"Our strategy is clear: consolidate IT talent in Southeastern Europe, a highly attractive market for IT professionals and technology. This includes expanding our network of offices, distributors, and agents in key sales regions," Alexiev told SeeNews in an exclusive interview.
Following is the full text of the interview:
Mr. Alexiev, we have entered 2024 with a large number of economic, geopolitical and demographic challenges. How do they impact Sirma's business strategy and operational performance?
In the second half of 2023, at Sirma, we started to feel the contraction of the IT business on a global level. It affected our US operations the most. We know that the wars, the economic turmoil and the high-interest rates have had a very negative impact on business. The specific nature of our business in the US, namely IT consulting services to dynamically growing companies (I deliberately avoid the word startups because startups in the US are very different from startups in Europe), has put us in a very vulnerable position because of the global downturn in IT investment. We expect this trend to continue until at least the first half of 2024. However, Sirma has started the year quite strongly with new customers and a good project pipeline. At the moment, we are moderately optimistic for 2024; let's see what the future holds for us.
Despite the unstable economic situation, Sirma has a solid financial performance and reports sustainable development. The company remains strongly focused on implementing its ambitious strategy for regional expansion. Have your priorities changed?
Sirma is setting an ambitious agenda for expansion and structural improvement. The main goal of our group is to grow. It is important to expand in all areas - not only in terms of revenue but also in terms of profit and efficiency. All these efforts for growth and structural improvement are aimed at preparing Sirma for a dual listing on the US stock exchange. In addition to our ongoing focus on organic growth at all levels of management, we are also actively pursuing an ambitious acquisition strategy. We are actively identifying new acquisition targets, with one nearing completion. Our strategy is clear: consolidate IT talent in Southeastern Europe, a highly attractive market for IT professionals and technology. This includes expanding our network of offices, distributors, and agents in key sales regions. We've established structures in Bulgaria, North Macedonia, Croatia, Albania, and soon Romania for talent attraction. Additionally, we maintain sales and marketing offices in 16 countries where our activity is highest.
At the same time, the company is undergoing a major structural transformation related to implementing our verticalization strategy. Sirma's business is built around several strategic verticals for the Group: Financial Services, Insurance, Transport and logistics, Hospitality, Healthcare, Engineering, and Retail. The rationale behind adopting a vertical approach and structure is to optimize sales outcomes by capitalizing on extensive expertise, established solutions, references, and customer base in our historically successful areas.
What are your focus areas for creating and deploying new software solutions in 2024? Where do you expect artificial intelligence to be an embedded functionality and part of standard offerings?
We are strategizing growth across all the identified strategic verticals. The big challenge for us in 2024 will be to complete the structuring of two of our "incubation" verticals - Insurance and Healthcare. In both of them, we have accumulated a lot of knowledge, customers, and technology. However, we are still fine-tuning the business model and clarifying the corporate structure that will accelerate the dynamic development of these verticals. Artificial intelligence is actively used in all our solutions - whether a chatbot or an algorithm performing complex optimization tasks, AI is present in perhaps over 70% of our solutions.
Since its inception, Sirma has been working in the field of AI. We strive to integrate big language models into our clients' processes and operations. From our side, the most open to LLM is the financial industry. We have developed several solutions for banks and financial institutions: chatbots for better customer interaction, compliance systems trained on regulatory documents, internal rules and processes for more efficient back-office operations, etc. Healthcare and Retail are the other areas where we have identified a strong demand, and Sirma has oun solutions to offer.
Sirma is a pioneer in the region in digitalizing healthcare. What are the recent achievements and developments?
Sirma has a number of well-established healthcare products that are world-class: Diabetes:M (the world's top 3 diabetes management system according to Healthline), Medrec:M - a personal medical record and patient-doctor connection platform. The next product, MPI-2, is a technology that applies some of the most advanced methods to correct stuttering, developed in collaboration with leading American speech therapists. I would also add that we have a very strong process management and medical laboratory integration solution for the North American market. Our US-based consulting company is one of the most experienced in medical systems integration.
How is AI changing the foundation of modern healthcare? Does Sirma have specialized solutions in these areas?
We use AI in our product Diabetes: M, where we try to predict (based on historical patient data) the occurrence of dangerous changes in blood sugar. The use of AI in healthcare is always done with great caution because of the great responsibility involved.
You run a company that has been successful for over thirty-two years. Which established or innovative approaches do you use to best address challenges? What principles do you never break?
Professionalism is the quality we have always valued most at Sirma. As the company grows, the processes, structure, and efficient organization become increasingly important. We have never stepped back from the principle of integrity in business. As a result, we have customers who have trusted and remained loyal to our company, products and services for many years.
What is your vision for 2024, and what will be Sirma Group's strategy to maintain its leading positions in Bulgaria and the Balkan region?
In 2024, we need to complete a major restructuring of the company related to the verticalization of our operations and the consolidation of our subsidiaries. We are also in the process of acquiring new companies. This aligns with our plans for ambitious growth and preparation for a major global exchange.