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Lebanon 2013 | ICT & MEDIA | INTERVIEW

TBY talks to Claude J. Bahsali, Chairman & CEO of Information Technology Group (ITG) Holding, on the strengths of Lebanon's IT offering across the region, and the potential of the local IT sector.

Claude J. Bahsali
BIOGRAPHY
Claude J. Bahsali received his Bachelor’s degree in Electrical Engineering from the American University of Beirut in 1982, and joined Mideast Data Systems (Lebanon)—affiliated to ITG—shortly after. Since then he has undertaken various responsibilities in the context of the group. Claude joined the Board of Directors of ITG (Holding) in 2001 and was appointed as Chairman and CEO in 2004. ITG is part of HOLCOM, an international group operating since 1967, with a strong presence in the Middle East, Europe, and Africa. HOLCOM employs more than 3,500 professionals in 200+ companies operating in 30 countries.

Information Technology Group (ITG) is part of a highly diversified group with operations all around the Middle East. What are your main drivers?

Let me give you a brief history of our group first, which will give you a better idea of where we come from and where we are heading. The group was established back in 1967 here in Beirut. We started off at that time selling office equipment, such as Olivetti typewriters and telex machines. In the mid-1970s, during the era of mini-computers, we decided it was time to address the opportunities represented by the growing IT industry. When the Lebanese civil war started, in parallel with sustaining and developing our local business despite the difficulties at that time, some group executives moved to countries in the Gulf region to develop our operations there.

It's all about people. Our human assets are the main driver of our business. This is why, as opposed to most other companies in our region, our group has not been built as a “family business," and that's part of our DNA. Since the start, the founders made sure to retain the management team as well as key people through a structured shareholding system (similar in some ways to stock options in the US, but more adapted to the reality of our regional market). As an example, our mother group (the HOLCOM group) currently employs roughly 3,500 people, which include around 150 shareholders, who are normally the managers and the senior members of its various operations.

I personally manage ITG, which is affiliated to HOLCOM, and employs 550 people in Lebanon including 35 shareholders. We fully focus on ICT, selling a comprehensive range of hardware and software products along with related systems integration and support services. Depending on the various markets we operate in, we have different go-to-market schemes, ranging from selling to corporate accounts (such as banks, telecom companies, and major accounts) to distributing products through networks of resellers. Our group is also involved in IT retail, through the establishment and operation of its own stores in certain territories. When it comes to ITG, our largest customer segment is definitely banking, which is historically Lebanon's most vibrant sector. We have been actively promoting IT solutions to banks and financial institutions since the 1970s. Over the years, we have developed a deep expertise in the provision of banking solutions. It is also worth noting that we don't just cover Lebanon, but also serve banks in the entire region including the Levant, Egypt, the Gulf region, and elsewhere.

Concerning our group operations in Lebanon, and besides ITG, there are more than 500 people working in sister companies, including the Globalcom group (focusing on telecom and internet), which comprises IDM, the largest ISP in Lebanon, as well as GDS, which operates a data network covering the whole territory of Lebanon. The rest of the group, known as MiDiS, is present in virtually every country in the Middle East and has also expanded its operations to Eastern Europe and Africa.

What are the strengths and weaknesses of the IT sector in Lebanon?

Despite the difficulties that our country has passed through, IT has always been an active sector in Lebanon. Moreover, local IT companies have always considered that the rest of the region was their natural market too and have expanded accordingly. The strength of Lebanon's IT sector has a lot to do with the availability of very good universities here. We are able to attract freshly graduated talent, train them in our projects in Lebanon, and involve them in projects across the region. Some prefer to travel and work abroad, some prefer to be based locally. The IT sector in Lebanon by itself isn't very large, estimated at about $500 million, which is similar to the IT volume of a single large European city. However, we have always looked at the whole Middle East region and are not just concentrated on Lebanon.

What is your outlook on innovation in Lebanon?

Institutions such as Kafalat have been doing a good job in providing loans to small companies, which has encouraged innovation. Recently, the Lebanese central bank started a great initiative by providing guarantees to Lebanese banks so that they can provide loans at greatly reduced rates—even at 0% interest rates—to IT start-ups. There are many good, talented people with great ideas in Lebanon, but without the money, the management expertise and the proper marketing and sales reach, their ideas won't go anywhere. This is especially true in the IT business, where innovation is essential and where technologies change at a fast pace. Lebanon's challenge isn't just financing companies to develop ideas and products; we also have to put a framework together to help those companies gain access to international markets—that is in my opinion the biggest challenge Lebanese businesses face.

As a group, we grow organically through recruiting talent/expertise and incubating companies. In this context, we have established earlier in 2013 a new company called SysPro, specialized in energy efficiency and smart building solutions. But we also grow by acquisition. We have lately acquired many companies that we've successfully integrated within the group, the last of which was Fadel Systems (renamed PrimeWare after our acquisition), which specializes in the provision of Oracle-based solutions.

What are your expectations for SysPro?

Buildings are becoming more and more intelligent. We sell a lot of related products, electrical equipment, cables, power protection equipment, networking equipment, computers, telephones, and the like. These are being sold to both offices and residential buildings. We found that most of our clients wanted a single source for all of that, a single responsible entity that would deliver a turn-key solution and successfully integrate such systems; this is SysPro's mission. Around one year ago, we identified the need to have a company that could interface between the various contractors, architects, and building owners, giving them a one-stop-shop for integrating technology into buildings. We had to find the right people with the right experience, and we did just that in SysPro.

How much investment potential is there in the ICT sector in Lebanon?

The potential is huge. Many companies have a lot of good people, with great software and intellectual property, but they lack sales reach in the market to sell their products across the region. That is something we can provide. ITG, as a holding company, firstly provides financial support to our affiliated companies. We can act as a bank for our affiliates. More importantly, we provide synergy between our affiliated companies. Our established companies have been in the business for years, with deep-rooted relationships with their customers. When we have a new company, we can give that company access to this valuable client base, which would otherwise take years to develop. ITG is keen to invest in areas that make sense for us and give our clients added value. There are currently 23 companies affiliated to ITG.

Where do you envision ITG in the near future?

I would like to see ITG as a pool of qualified IT people based in Lebanon and serving the whole region. I envision a team of professionals providing services to specific industries such as banking and finance, telecoms, higher education, hospitality, healthcare, and others. We are investing a lot in that direction and we believe that we have a unique position there to succeed throughout the Middle East. I don't know of any local or regional group that has our reach or our level of expertise in banking and financial software. Of course, I don't want to limit ourselves to banking or to any other vertical sector for that matter. Our group also comprises substantial “horizontal" expertise in Oracle and Microsoft technologies. We will nurture those kinds of value-added businesses and promote them across the region. We will develop ourselves organically and also acquire companies that will enable us to grow in sync with the dynamism of the ICT industry. That will help us take ITG to the next level.