Bangkok Post : IT alliance eyes Asean market

New software development technology plus pressure of competition has led a local pioneer to form a strategic alliance to capture more opportunities and strengthen core business to compete with global IT services and prepare for service liberalisation in Asean.

The company, together with Soft Square (1999), Business Application Consulting and A-Host have formed a strategic alliance sharing human resources in order to strengthen their core business and enhance their comparative advantage to compete with foreign IT services, according to Mfec president Siriwat Vongjarukorn.

The company has already selected its top talent "F1" technical staff, pooling with other companies so that if there are any problems they can utilise common resources.

Moreover, when there are big projects that need a high volume of people they can join forces to deliver projects and win customers together, thereby avoiding competing with each other and increasing their bargaining power to compete with global IT companies that rotate resources with low-cost skill sourcing.

The four companies have more than 10 years experience with a combined force of over 1,000 staff and have various skills which can complement each other in turnkey projects ranging from software and hardware to application development, including consulting.

This will enhance their capabilities to win larger projects in both domestic and international markets.

Siriwat said that the company has enjoyed solid business growth for the past few years but in order to compete with big players at the global level, the company has had to adjust to sustain itself in the long-term.

Recently, out of five deals, the company lost three projects to Indian competitors and there are lot more competitors from China, Vietnam, Singapore and Malaysia.

This alliance is a deeper collaboration because in the past, the company has collaborated with A-Host and Soft Square to train new graduates in the northern provinces to serve demands in the market but this time will focus more on business. However, this alliance does not involve cross sharing or joint ventures.

"We are open for other companies to join forces in this collaboration to complement and strengthen local IT services. This is the way that the industry has to strengthen itself because we cannot rely on government support and there are too many IT associations out there," Siriwat noted.

Ramade Silapapom, CEO of Soft Square (1999), added that the software strategic alliance is similar to Star Alliance in the airline business in which each member has their own strength but share their seats and customers to leverage maximum resources.

The alliance will join together in sales and marketing including protecting lost opportunities, especially international projects that require a large full-time workforce. The alliance may jointly submit proposals together or they can allocate some parts of a project to the alliance.

This is an important stepping stone to help to resolve long term problems in the software industry including shortage of supplies, high turnover and overpaying inexperienced workers and which cannot hire too many workers because of fixed costs.

This will enhance local strengths to fight amid high pressure competition and give local businesses comparative advantage when Asean allows a free flow of skilled IT service force in the next five years.

Currently, there are a lot of global companies established here in Thailand but when the free flow of skilled force comes, Thai people will be hired by other countries and less by Thai businesses.

Meanwhile Manoo Ordeedolchest, Chairman of the Board, Software Park Thailand, said dynamic technology software developments are turning points to form the alliance because it will allow the company to build various skill resources in time to meet customer demand.

In the case of this alliance, there is trust between local companies and they gather their expertise to fulfill customer needs in one single contact.

However, the collaboration is not limited to local companies to fight with other countries; it can also select strategic partners across Asean to pave the way in a third country market.