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WM-Data: would-be Nordic powerhouse

Aiming for a 10,000 employee, €1.1bn business

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Having completed the €200 million acquisition of Finnish IT services company Novo Group, Sweden's WM-Data is looking to grow further over the next few years. However, recent attempts by Nordic vendors to build a more global business have been largely unsuccessful, and WM-Data is likely to just focus on the Nordic region instead.

Stefan Gardefjord, vice president of WM-Data, says the firm is again setting its sights on an ambitious "10-10-10" aim: building a 10,000-employee business with SEK10 billion (approx. €1.1 billion) revenue and a 10 per cent margin. With Novo, WM-Data is expected to generate approximately €1.1 billion in annual revenue and now employs 8,300 staff in Sweden, Finland, Denmark, and Norway.

The acquisition should enable the company to match its full Swedish services portfolio in Finland, WM-Data's second largest market. The healthy and relatively uncrowded Finnish market, which lacks many of the larger US competitors present in other Nordic countries, should also give WM-Data protection from the IT industry recession, particularly now that the company has completed a long period of restructuring and cutbacks.

Mr Gardefjord believes Finland has strong potential, despite it being Tietoenator's home territory. "In Finland there is not as much competition from international IT services firms as there is in Sweden and Denmark," he said.

This differentiation between "local" and "international" competition, such as IBM Global Services, EDS, Hewlett-Packard, and CSC, is one of the more recent developments amongst Nordic IT services players. It has resulted mainly from the failure of most local vendors to spread overseas over the past few years, to follow the growth of their large clients such as Volvo, Nokia, Ericsson, Saab and Ikea.

Mr Gardefjord said that if and when the company expands outside of the Nordic region, it will probably be in eastern Europe, either for low-cost "near-shore" operations, or to provide a local service to the overseas operations of its large domestic clients.

But such expansion is clearly not at the forefront of the company's strategy. WM-Data wants to dominate the Nordic market as a home player, but this will make its growth heavily reliant on the region's own economic recovery. With organic growth in IT services spending expected to be low across the Nordic countries in 2004, acquisitions are going to be WM-Data's main route to growth.

Source: ComputerWire/Datamonitor

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Reuters Business Insight, "The IT Services Outlook" (RBTC0063)

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