The old negative perception about Romanians in the global market is disappearing and more companies are welcome when expanding in new markets. Examples like UiPath and Softwin show that Romanian companies can successfully scale outside the country. In order to find out more, we talked to Voicu Oprean, founder and CEO at AROBS, an IT company from Cluj to learn the things needed in order to successfully expand the business.
What are the first steps towards expanding a business to other countries?
The first steps are: strategy, strategy, and… strategy again. Our strategic vision has been and will continue to be clear: to take over players operating in similar industries, through acquisitions that can create synergies and are easy to integrate in AROBS Transilvania Software’s culture. This is followed by implementation, finding the right people and execution.
In our case, before the acquisition of CoSo by AROBS in the spring of 2018, we were already present on the Western market through our Germany branch and directly from Romania. We had top clients in the area. The chance of being present in Benelux was interpreted as an important opportunity, and the connections and similarities between CoSo and AROBS were already there, especially since we had worked with CoSo in the past.
What’s the easiest way to prospect an external market to see whether there is demand for the services you offer?
I don’t think some methods are easier than others – if there’s an easier one, we’d be happy to hear about it.
We believe in the continuous testing of opportunities. Market research has obvious particularities that need to be given a lot of attention, as part of a well-structured process, in order to be able to quantify both the risks and the opportunities.
At the same time, you need cultural synergies and compatibility, and we thought that the Benelux market had an open communication culture.
How many people do you need in order to expand internationally (for legal, accounting, etc.)?
You’ll go through several phases. Each phase needs a different type of team. For prospecting and due diligence, you’ll need an interdisciplinary team. The second step is setting up the interim period to establish the link between the two entities’ organizational culture and make the first step towards standardizing cultures and processes. The management team that takes over after the interim team is the one that consolidates the acquisition.
What is the cost of prospecting an external market and what does it involve?
Prospecting a market and doing due diligence have considerable costs, which can vary depending on the size of the acquisition.
In Western Europe, there are companies specialized in this process who can help you, such as investment bankers. But there’s also an opportunistic option, based on flair and gained synergies.
What’s easier: to open a company in a new country or just export and use local distributors?
We’ve been exporting software services or products for over 20 years.
We’ve chosen to open greenfield investment-type international branches or acquire companies abroad.
As a result, we have branches in Hungary, the Republic of Moldova, Germany, Indonesia and, through the acquisition of CoSo this spring, we’ve added The Netherlands and Belgium. Each time, AROBS picked up the challenges and opportunities of being present in these dynamic markets, some of them extremely demanding and expensive.
What are the main obstacles for a company that’s trying to expand?
That depends – for some companies it may be the financial resources, others may have difficulty with the logistics side of the process. Cultural differences are also very important and can turn into obstacles in the way of expansion.
But the most important aspect is the courage to do something that’s different from what all the other companies on the market are doing. For us, these acquisitions come after other attempts and failures in the US and Finland, which taught us important lessons.
Why do you think so few Romanian companies are present abroad? What do the Polish, for example, have that we don’t have?
We’re probably stuck in our preconceptions, ideas related to the way Romanians are seen in global trade.
I’m seeing more and more signals that this old negative perception of Romanians in the global market is disappearing, it’s changing. There are already models like UiPath or Softwin which have shown it can be done.
As for the Polish, I don’t know much about the different approaches they have in international business, especially in the IT sector, and I’m wary of using empirical data.