How has outsourcing transformed from its conventional form? Insights from the experience of Valeriy Krasovsky

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Sigma Software is an international company with offices in 17 countries worldwide. The company, with its Ukrainian and Swedish roots, provides IT consulting services to clients across the globe. Among Sigma Software’s clients are Volvo, Scandinavian Airlines, Verizon Media, DanAds, IGT, Formpipe, Knorr-Bremse, and other companies operating in 10+ different business domains.

Over its 21 years of existence, the outsourcing company has evolved into a mature full-cycle development service provider with a developed ecosystem. This ecosystem includes its own business incubator, educational platform, business associations of companies, proprietary product line, and more.

Valeriy Krasovsky, co-founder and CEO of Sigma Software, shares insights from his experience on why businesses should build ecosystems around themselves and how it works.

— Valeriy, Sigma Software is not just a company but a group of companies. When did it start forming, and why did it happen? What principles guide companies to join the group?

— In reality, it’s a story that spans over 15 years. In 2006, our company became part of the large Scandinavian Sigma group of companies. At that time, we had several offers, but we liked Sigma because they worked in a similar approach and mindset. They were professionals with a built-in culture of respect within the company. Moreover, they didn’t establish a strict hierarchy but divided the group into independent companies that were quite mobile and could develop on their own.

Mentally and from a business management perspective, even before joining, we were similar to Sigma. In this deal, we also saw new growth opportunities for ourselves. We understood that for a Kharkiv-based company with a team of 60 people, the path to working with clients like Volvo would be very long if we were alone.”

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After that, we grew organically for a long time, but at a certain point, we decided that we needed to seek partners. So, in 2020, the Kharkiv-based service company IdeaSoft joined us, followed by another company — Eventyr.

Thus, Sigma Software became a group of companies. In a sense, we repeated our own history because IdeaSoft and Eventyr retained their identity, management, and a certain autonomy while gaining the opportunities available to a large and stable company with a developed brand.

— Last year, Sigma Software announced the creation of the UA Tech Network business association. These companies, unlike IdeaSoft and Eventyr, are not members of the group?

— Yes, this is a separate association, which currently includes several dozen Ukrainian IT companies with a total workforce of over 1000 people. Its aim is to support and help develop small and medium-sized Ukrainian businesses, which face certain challenges during the war.

UA Tech Network is not an association; it is a union for more effective business development. Our goal is to establish synergy between service and product companies, finding common ground for them. Because in difficult times, it’s better to act together.

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Furthermore, UA Tech Network residents have the opportunity to leverage the 20 years of experience and extensive network of Sigma Software. With expertise in 10 different business domains, contracts with global brands, and offices in 17 countries, we provide small companies with the ability to work with global giants, receive mentoring support, marketing promotion, and greater credibility in such a partnership.

— As you mentioned the synergy between product and service businesses: Sigma Software is a service company but also has a product line. Combining such diverse businesses must be challenging, why did you decide to develop your own products?

— It’s a well-known fact that many IT professionals dream of having their own products. We are no exception. Over 21 years, we have tried something, made mistakes, started over, and gained experience.

In reality, products are a niche that not only Ukraine but the whole world strives for. In many markets, products are in higher demand than services because they are ready-made and can be taken and used here and now. However, few people realize the boost that a service business can give to a product.

You see, the success of a b2b product lies in solving a business problem that no one has solved before. Ideas for such products arise when a person understands a specific subject area well and the business needs. Knowledge comes only with experience, which consulting company engineers actually provide: they have the opportunity to work in different domains, with a wide geography of clients and businesses of various sizes.

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An example of such a working model is, which became the startup of the year in Baltimore (USA) in 2019 and has attracted several rounds of investments. The Sigma Software team became a co-founder, investor, and co-author of a solution that fights malicious advertising. With real-world domain expertise, we clearly saw the market problem and were able to solve it, immediately gaining high interest from clients.

Recently, acquired the American company Human, one of the leaders in the cybersecurity market. Interestingly, a year before that, Human also acquired the Israeli startup PerimeterX, so now we can say that we are part of a team that combines the best minds of Ukraine, America, and Israel to implement effective cybersecurity.

Following the same principles, member companies of the group also operate. For example, IdeaSoft has developed the Global Ledger product based on its platform. The product offers a unique service that prevents cybercrime and money laundering, allowing banks to work freely with cryptocurrencies. Its story began several years ago. At that time, the founders already had deep experience in various Blockchain and FinTech projects and clearly saw the future problems that would arise with the increasing use of cryptocurrencies. The project is developing successfully; in 2021, it entered the global market and announced the start of cooperation with the UN Office on Drugs and Crime. In partnership with them, Global Ledger launched a cryptocurrency course focused on combating the illegal use of digital assets.

In summary, today Sigma Software is an integrator of a large number of different product solutions. Some of them we facilitated and launched as our own, while others are products of partners.

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— You mention a lot of trending technologies on which you build products and solutions. Do you have your own R&D center to study them?

Research and development have been a part of us for a long time, of course, we keep track of trends in the world of technology. In 2016, we set up special laboratories in our large offices in Ukraine, but with the onset of quarantine, and then the war, physical R&D centers are temporarily less active. However, R&D work does not stop.

We work in various business domains, from automotive and aviation to e-commerce, construction, finance, advertising, gaming, and more. When you work in a sector for a long time, you start to see problems that have not been solved by anyone yet. The idea arises that there is room for some new product or startup. This is the advantage of a business that works with a huge number of industries.

When our engineers have ideas, they can implement them using our R&D centers. If it seems that the idea may be successful, we can continue cooperation within our Sigma Software Labs incubator.

— Is this incubator also part of your ecosystem? Does it continue to operate during the war?

— Yes and yes. Sigma Software Labs is a separate investment division of the Sigma Software Group. This project was designed from the very beginning to combine the efforts of service and product businesses, look for product solutions in the service business, and develop them into separate companies. Since 2019, $1.5 million has been invested through the incubator in 12 portfolio companies. In particular, last year, the portfolio startup Datrics attracted a strategic partner, which became a significant success for the company’s venture history. Another cybersecurity product solution has become part of a large American company and continues to develop in the market under a strong brand.

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The main goal of Sigma Software Labs is to create an ecosystem for startups, provide mentorship, assistance with investment attraction, as the company has a wide network of funds and investors. Additionally, we can invest in promising projects ourselves, through Sigma Software Labs and the SID Venture Fund, founded by the co-founders of Sigma Software together with the founders of IdeaSoft and Datrics.

Despite the war, the incubator continues to operate, conducting startup competitions, sharing expertise with entrepreneurs, investing in and supporting its portfolio startups, helping to scale solutions to international markets.

— But you don’t just educate entrepreneurs, do you? Part of the company’s ecosystem is its own university. What does it do? When and why was it created?

— Sigma Software has been paying a lot of attention to education since its inception. More than 15 years ago, we started working with students and universities, developing professional communities, and also began building a powerful system of internal training and mentoring to provide all our specialists with maximum opportunities for professional growth.

As a separate brand, Sigma Software University emerged in 2016. At that time, we had a lot of projects, initiatives, partnerships aimed at education, both within the company and externally. We decided that it was time to bring them all together and structure them. At that time, other large companies already had their own educational platforms as well. The main difference of Sigma Software University from them was that they focused more on internal training and training of Junior-level specialists. In addition to these two areas, we also offer courses for experienced professionals. These courses and trainings allow Senior-level specialists to master new programming languages, new technologies, and share experience with each other.

The university operates in three main directions. Firstly, internal education and mentoring program within the company. Secondly, partnership with educational institutions, improvement of university educational programs, work with students, internships, and camps for those who do not yet have experience or are just starting their IT career. Currently, we have partnerships with over 40 universities, colleges, IT schools in Ukraine and abroad. Finally, the third direction is external courses covering various technologies, specialties (both technical and non-technical), and professional levels.

Despite the war, our university has continued to operate, and even in a more intensive mode, joining projects of the Ministry of Digital Transformation, launching free courses for those who lost their jobs due to the war, working on teacher training, and so on.

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Currently, Sigma Software University also operates in other countries, such as Sweden, Israel, Saudi Arabia, Poland, Georgia, and we are establishing relationships with Germany and Tanzania.

We also undertake educational projects for children. In the middle of summer, Sigma Software, together with the charity foundation “Voices of Children” and the IDF school of programming, launched the Star for Life Ukraine project. The project aims to teach schoolchildren computer literacy and basic programming skills, provide them with psychological support if necessary, and motivate them for learning and personal development.

— Thank you, Valeriy, for the interesting conversation. Finally, we would like to ask, what are the company’s plans for 2023?

— As before, we are actively developing business in all markets where we operate – this includes the USA, the European Union, and the Middle East. We are continuing to develop Ukrainian offices (which, by the way, increased by as many as seven more in 2022 than in 2021) and doing everything possible to ensure that the majority of orders come to Ukraine. I think this is the best support our Western partners can provide us.

We are also engaging partner venture funds for investments and comprehensively developing all components of the ecosystem. We are confident that our efforts are already yielding results, so the IT industry will continue to thrive, ensuring financial stability for the country and its people.

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