The report indicates two leaders in the market consolidation trend, who publicly communicate takeovers and the intent to continue their M&A strategy: Netguru and TenderHut. 3–5 years, some of the largest entities will remain on the market, which will be characterized by higher profitability and better diversification of the client portfolio. What is more, it is difficult for smaller entities to invest in building good marketing and sales teams, and they base their revenue on a narrow group of 2 – 3 critical clients, which increases business risk. Despite having very good teams and strong skills, a significant number of smaller entities achieve results at the profitability threshold. The market is very fragmented and highly competitive at this time. The trend of growth through acquisition is confirmed by Adam Demusiak, partner at PwC, head of the Mergers and Takeovers Team, who predicts further consolidation of the industry and greater interest of private equity funds in this market sector in a comment given in the above report: „ Consolidation on the software house market seems unavoidable. The report: “Does Poland have a chance of becoming the IT hub of Europe” by the Citi Handlowy Foundation, in collaboration with SoDA, indicates that, in terms of path of growth, 20% of companies choose the strategy of scaling through acquisition. The solution most frequently applied by the most mature software houses is consolidation, which makes it possible to scale these businesses the fastest.Īt this time, some of the most mature software houses in Poland are seeing their opportunity for dynamic growth in consolidation. The roadblocks to the industry’s development, as identified by experts, are: fragmentation, these are often companies consisting of several people, as well as problems with hiring new employees, both developers and management staff. Additionally, more than a quarter of companies reported strong revenue growth – up to 30%, and some exceeded the 100% year-over-year growth ceiling.” – write the authors of the report.ĭespite such good results and positive sentiments, after over 30 years the industry is starting to reach the wall measured by the potential of organic growth. “Despite initial concerns, in the second quarter of 2020, companies said they increased revenue by an average of 20%, compared to a projected profitability of 15%.
Software houses have also decided to increase marketing budgets.
Still, the market absorbs and needs new employees. Managers also signal new trends such as the acceleration of digital transformation among customers and more frequent experiments with marketing tools. The assessment concerns both liquidity and financial results of companies from this sector and the operational sphere of the whole industry. According to the latest report by the IT Services Employers’ Association (SoDA) “The impact of Covid-19 on the Software House industry in Poland”, managers of Polish software houses are optimistic. Software companies in Poland have coped well with the effects of the economic freeze during Covid-19. The key features of Polish software houses are not only their attractive prices due to lower labor costs, but also their extraordinary programming proficiency, many years of experience, and the ability to solve problems flexibly. These companies operate globally – supporting both the Polish and foreign markets with their services. Its database contains 843 software houses from Poland, while only 430 are from Germany and 95 from Czechia. This is confirmed by data from Clutch, which is the most important ranking service, including for software development companies. Software houses, or companies that develop software for clients, are a Polish export in the IT sector.
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