8 - 14February 2001

Catching the current

John Wright, managing director of software developer, Crimsonwing Malta Ltd, talks to Blanche Gatt about the company’s present and future strategies

Ever since the late 1980s, education gurus have been touting Information Technology as the goldmine of the future. Enormous efforts were and are made to channel young students into the technology arena, and these endeavours are already paying off.
Talented IT graduates are learning that this was no pipe dream they were fed – employment opportunities for software professionals are not only guaranteed, but plentiful, and salaries are among the highest on the island. Recent news that Crimsonwing Malta Ltd had launched a company share option scheme giving all its staff the opportunity to acquire shares in the holding company Crimsonwing Group Ltd only adds to the general consensus that computer geeks have become the nation’s greatest assets.
But of course, without the industry to support them, these IT experts would have nowhere to peddle their talents. Crimsonwing is one of Malta’s largest employers of software professionals, with over 150 staff, of whom more than 95 per cent are Maltese, on their books. I recently spoke to John Wright, Malta’s newly appointed managing director, to learn a bit more about what and how Crimsonwing operates.
One of my first questions was about the company’s name. Up to a year ago it was known as Magus International and, through its Marsa office, offered programming and IT skills to major UK firms like Safeway, which opted to out-source some of their applications development.
“Well,” replied John, “the company took a strategic decision to add e-business to our portfolio of software solutions about a year ago. And we decided that we should have a name that reflects what we do. Crimsonwing has the right sound and also gave us the opportunity to have a dotcom web address, which is important in our industry.”
Taking the company into the e-commerce arena was perceived as opening up the brightest future for an IT company. The digital economy was booming in a big way, and, despite the fact that many business to consumer (B2C) businesses were losing money, the business to business (B2B) sector still held promise of tantalising reward.
As this sector continues to grow steadily, offering staff the chance to share in the growth and profits of the company is also offering them a chance to participate in the expansion of the “new economy”.
“It is quite common for companies in the UK to have share option schemes,” John said, “and we are registered in the UK, with Crimsonwing Malta registered as a subsidiary. So we chose this way of repaying the loyalty of our staff, and also as an incentive to attract new staff. Each employee has been given a personal allocation depending on his or her position and length of service. Every single one of our staff has been offered the option, from administration and management to the cleaning personnel. The only criteria is that they have been with us for a minimum of three months.”
One of the main attractions, continued John, is that it is not yet a publicly traded company. “Any company only goes through IPO once in its lifetime,” he continued. “Normal share options are extremely valuable when it comes to IPO, and we are planning to reach that stage within the next three years, when the company is six years old.”
The value of the company is estimated by the UK Inland Revenue; through which process the company is evaluated and guidelines set as to what each share should be worth. However, though the Inland Revenue can set thresholds, the actual price of the shares remains at the discretion of the company.
“Each employee has been offered shares at the same, very attractive price,” commented John. “The details remain confidential between the company and the employee, just like salary details, so it is not possible to divulge more. However, suffice to say that in order to achieve this, the directors had to relinquish a significant percentage of the company.”
The directors of Crimsonwing are David Walsh, founder and CEO; Mike Winch, executive chairman; Philip Crawford, non-executive director; and Mike Anthony, original founder of the company.
Plans for Crimsonwing’s future are ambitious, and John tells me they include the recruitment of more than 50 new IT professionals. “My goal is for Crimsonwing to become the IT employer of choice for young IT graduates,” he continued. “Our target head count for the end of this year is 200, with a 40 per cent growth in revenue, as we have done every year for the past two years. And we are very confident we can fill our order books.”
“Our strategy involves diversifying in several directions. We started in computer services, adding business solutions 12 months later. Now we plan to start developing our own products, software packages that are targeted at certain market sectors.
“We’re negotiating to acquire intellectual property rights from certain major developers, which will cut down on the time it takes us to dev-elop our packages from the normal two years to six months. Apart from that we also plan to diversify into product systems management. We have several clients who want their production systems maintained and managed, and we have decided to grow this into a substantial and regular part of our business.”
Crimsonwing’s current list of clients includes a number of universally recognised names. The UK retail giant Safeway is one of their main customers, to whom they provide systems development services. For another client, Ideal Hardware, they develop and support systems,
as well as offer e-commerce
solutions.
Sangoban, a manufacturer of industrial components has been serviced with an e-commerce solution for their web-site and for Planet, a supplier of software to the kitchens and bathrooms industry, Crimsonwing customises their software to match individual catalogues.
“We have about 10 active clients at the moment,” said John, “and we badly need to grow. There is far too much work for 130 people. For example, Planet has just added an extension to their contract, and we’ve employed an extra 30 people just to handle the work.”
Originally, Magus was established as an off-shore development com-pany dealing with India, John explained. “However,” he continued, “the CEO had done some consult-ancy work with the government of Malta and so was familiar with the environment here. In the meantime there were some problems in outsourcing through India, all of which being in Malta solves. The first was language – everyone here speaks English. The second was distance. While India is a long-haul journey from the UK, Malta is only three hours away.
“The third was the time difference; Malta’s only one hour ahead of the UK, and the fourth was the culture, and the long association between Malta and the UK.
“It is also true that we came here for cost reasons. It is cheaper to employ IT professionals here than in the UK, and Maltese IT staff are just as good as UK professionals and in some cases even better. There’s very much a can-do attitude.”
Most of Crimsonwing’s Maltese employees are graduates of the University of Malta, and John explains that Crimsonwing has built up a very strong professional relationship with the University.
“We take a great many of their graduates,” he continued, “and make available our resource centre with
its comprehensive computer-based training library to them. We also offer our own staff financial assistance for further training.
“There are two reasons for this. The first is that it is attractive for the employee, the second is that it’s good for us too – the added education is never wasted. And we have a philosophy at Crimsonwing. If we are good to our employees, they’ll be good to us.”
When Magus was first set up here in 1998 there was a lot of speculation that they had just come in to solve the Y2K bug and would disappear faster than the puffs of smoke from the final New Year’s Eve fireworks display.
“Indeed,” confirmed John, “there was a lot of speculation along those lines. But here we are in 2001, with 150 employees who are all being given the chance to buy shares in our holding company, operating out of a three-storey building in Marsa, I think that myth can be dispelled now. There can be no doubt that Crimsonwing intends to stay long-term in Malta.”