Opportunities exist for companies willing to look further afield. In every crisis there is opportunity, for those farsighted enough to see it and bold enough to take it.
By Adam Gifford
Published in The New Zealand Herald February 2009
New Zealand’s dollar has dropped to levels where exporters would in theory find it easier to sell goods or services – if their customers were buying.
Some are. There has been a surge of video production over the past couple of months, as overseas advertising agencies take advantage of the exchange ratyes, and the short project lead time of that sector, to slice their costs.
Software companies are also hoping for some extra work doing short projects for overseas clients, but the ground needs to have been prepared.
Graham Dockrill from Christchurch-based web developers Hairy Lemon travels to the west coast of the United States several times a year to find new business.
“We put a lot of energy into building networks and communicating with our US clients, because we do compete against competitive bids,” Dockrill says.
He says it’s not just on price. “If it was, we’re up against Ukranians and Romanians who would blow us out of the water. We have advantages around quality.
“It comes down to the fact Americans still have no problems outsourcing, but a lot of the work we are getting is second generation; companies have had a bad experience with India or Russia, but they still want to outsource.”
Dockrill says most of Hairy Lemon’s projects are top end website developments with typical budgets of $50,000 to $100,000.
Software development shops are also well placed to pick up offshore work. Tony Stewart, the managing director of Microsoft specialist Intergen, says his firm went looking for projects to get the firm through the summer.
“We got quite a lot of work. We quoted in US dollars, so the exchange rate drop didn’t make that much difference, but in future means we can be very competitive.
“What we do are typically small, high value things. We are using the newest Microsoft tools, which there is a demand for.”
Stewart says the aim with such work, which can include training, websites and custom application development, is to fill in gaps in the production schedule, rather than build the business around it.
That is a strategy some New Zealand developers have tried in the past, only to see their competitive edge disappearing with exchange rate movements.
Industry veteran Garth Biggs, a member of the advisory board of the New Zealand ICT Innovation Institute, says some work which New Zealand firms were getting done in India and elsewhere may be heading home.
“The Indian companies were low priced but they were priced in US dollars. The exchange rate move means local dollar services become more attractive,” Biggs says.
Technology investor and advisor Ant Howard says product development seems to be heading back home as the gloss goes off the Indian outsourcing story. He says the market worldwide is confused, with projects everywhere being delayed or decisions deferred as organisations try to get a fix on how much revenue they can expect in the year ahead.
“If it was just the exchange rate people could respond, but everything is up in the air,” Howard says.
The Howard & Co portfolio includes a range of technology companies which are exposed to the economic meltdown.
GFC Group, which makes banking and mobile payment systems, is still seeing a lot of work being done by clients in Asia and the developing world, but banks and telecommunications companies in the developed world have more pressing concerns right now.
On the other hand its EMS-Cortex business is experiencing huge demand for its provisioning software.
This allows large organisations or outside providers such as telecommunications companies to easily roll out business applications like Microsoft Exchange or SharePoint Services and manage them from a central point.
“Cortex is going gangbusters because people are avoiding capital expenditure, so the long-awaited move to software as a service has been given a shot in the arm,” Howard says.
He also raised capital for Wellington digital marketing firm Run the Red, which is developing advertising for mobile phones here and in Brazil.
“When a dollar is tight, the beauty of digital ads is you do have measurability. You can determine how a successful campaign is. With a full page newspaper ad, you can never be sure which half worked,” Howard says.