The FINANCIAL — UGT Holding, leading systems integrator and provider of solutions in the field of information and communication technology, expects to have growth of 15-20% by the end of 2012.
The FINANCIAL — UGT Holding, leading systems integrator and provider of solutions in the field of information and communication technology, expects to have growth of 15-20% by the end of 2012. The company which started operations in Georgia in 1997 has its US based head office today in Dallas, Texas and plans to open new branches in Florida and Washington in near future.
“2012 has been successful for UGT Holding so far. Georgia is continuing its economic growth in spite of the economic crisis taking place on an international level, including in Europe and America,” George Chirakadze, President of UGT Holding, told The FINANCIAL. “The IT sector is very specific. In general demand for IT is increasing all over the world, and consequently, an increase has been observed in Georgia as well. UGT Holding is much diversified. We serve various sectors incorporating large companies, small and medium-sized businesses and consumer. We hope that this growth will continue in the fourth quarter.
The recession does affect the IT sector but this field manages to recover soon. In general IT companies in general are first to overcome crises. The demand for technologies is due to companies’ decisions to increase efficiency and reduce expenditure. Of course domestic political events such as the election period do generally affect the economy. Nevertheless we believe that this period is over in Georgia and therefore the fourth quarter and the year as a whole will be successful.
Q. UGT started operating on the Georgian market in 1997. Tell us in brief please – what kinds of steps have been accomplished for your customers?
A. When we started operating in Georgia in 1997 many people did not even know what a computer looked like. Demand for IT from companies was very low. Ten years ago many people did not know how credit cards or ATMs worked, whereas today the vast majority of the population uses electronic services which are based on the work of Information Technology. Currently IT is one of the most important and competitive elements for the state, for businesses and consumers. This is due to the fact that large companies such as banks, telephone companies and the public sector invested considerable amounts of money and effort in technologies. This has really enabled the prompt development of information technologies. In terms of the developmental level of IPTV Georgia exceed the United States and many other developed countries. IPTV totally stands behind information technologies: databases, servers etc. The implementation of IPTV moved TV in Georgia forward. IT has become a tool for the competitiveness of many businesses and companies in Georgia. No one could have imagined that cable communication companies Silknet and Caucasus Online would become associated with television. These companies that were once associated only with internet providing and telecommunication suddenly found themselves large players in the TV industry. The number of IPTV users in Georgia today is growing. The key issue is that the service offered by the above-mentioned companies is totally based on information technologies. Any service delivered by banking, communication or any other industry is entirely backed by technologies. Significant changes have occurred in the Georgian technology industry during the last 10-15 years. As we are a small country, it is much easier to do many things more quickly. The IT industry has been developing in Georgia and at present is much more developed than it was just a few years ago.
Q. UGT made a significant contribution to the technological development of Georgian companies. What kind of technological changes should be expected in the coming years? In particular, what will happen in this field and how will these changes affect business in the country?
A. Future progress in our industry depends on the country’s economic development. Information Technology is based on economic development. Everything depends on the global situation as well. The economic growth of Georgia is closely linked with the world economy. European and American recessions do matter to us. Unfortunately we are not yet seeing any signs of recovery from this crisis in the world. Nevertheless, we have managed to avoid the worst conditions. The IT industry is developing faster than the country’s economy. Further development of the state sector, commercial and large enterprises that will stimulate economic activity, will influence our motion forward.
IT is the basis of everything. The prospect of this industry’s development in Georgia is huge. IT allows both businesses and consumers to get competitive advantages. Today we are able to pay utility bills from home, do not have to spend hours waiting to watch a specific news story on the TV. The saving of time and comfort that has been brought by modern technologies is a great relief. All the advantages of modern services are brought to us by IT. If people do not wish a return to the Stone Age, then IT will continue to develop very rapidly. IT enables each of us to be more productive, competitive, and receive such services that were previously considered inconceivable. We are experiencing a totally different way of life. We are facing an IT revolution which will enable us to have access to services and resources that seemed impossible 10-15 years ago. Our offers to our customers are based on their demand. Demand develops differently in different fields. It is good that demand for information technologies has been demonstrated by government organizations. We hope that the newly elected government will continue recognizing the importance of IT sector.
Q. What is the situation in terms of cyber security in Georgian companies? Have you faced corporate, cyber espionage in Georgia?
A. Cyber security is very important. The 2008 Russia-Georgia war made that clear. The attacks carried out in the banking sector and many state structures were an important tool used by Russia during the war. In general the whole world is very vulnerable to cyber-attacks. Billions of dollars are spent worldwide on cyber security. Georgia is no exception. Cyber security is a very important area and our company actively participates in that. Cyber security is largely dependent on government agencies’ and the commercial sector’s desires to spend on it. Georgia is currently not succeeding in cyber security, despite the fact that many private or public companies pay huge interest in it. The reason for it is that cyber security requires huge investments, qualified specialists and even then you are not a hundred percent sure. After 2008 Georgian organizations increased their investments in cyber security, but there is no uniform policy. The importance of cyber security depends on a company’s and public’s attachment to electronic services. Georgian banks spend millions of dollars on cyber defense.
Q. What is the last word in technology today? Which technological products determine a business’s success?
A. Virtualization is one of the hottest topics in the IT world because of the potential for serious economic benefits. Virtualization enables multiple operating systems to run on a single physical machine as virtual machines. With server virtualization, consumers can consolidate workloads of underutilized server machines onto a smaller number of fully utilized machines. Mobile devices, services and mobility in general is the future for our industry. The technical structure of personal computers has remained unchanged – meanwhile cell phones, tablets and TV have been promoted with their revolutionary developments. We are witnessing serious innovation, which has been introduced in for consumer, corporate and government sectors in recent years.
Services which are designed for consumers provide a competitive edge for companies. Today any bank that offers online transactions charges its consumers 50 tetri to 1 lari. That extra cost however greatly saves time and brings many advantages. Any company that continues to improve service will increase its advantages. Electronic systems are changing our way of thinking and nothing can replace them. The main key for a success is finding services that are useful for consumers for which they will pay for it. Only those companies that understand market needs, customer demands and see business opportunity will succeed.
Q. Which technological innovation can you offer the new government?
A. UGT Holding can offer various services to the new government. First of all we will try to see the new government’s priorities, to see in which direction they will decide to work. Their priorities will directly influence our decision to make new proposals and offers. There are many things to be done in Georgia. The more you do the more you need – this is the principle of IT. The situation is the same in consumer service. The more services customers receive the larger the area of opportunities. We are ready to cooperate with them and provide them with the services they choose.
Q. UGT is operating in the USA. How would you assess your work in the States and how would you compare business operations in the United States to those in Georgia?
A. Our company has been success in the USA as a startup. America is a very large market. We consider our operations there in the long-term because the opportunities are abnormally large. A deficit of time for concentration is the main obstacle for our work in the USA. We are quite satisfied with the results of business development there. There is a big difference between Georgian and American consumer levels. Doing business in America is very specific. In many cases, doing business in America is more difficult than in Georgia. Some things are easier there. For example, credit terms – financial resources are much cheaper in US than in Georgia. Meanwhile in a bureaucratic way many things are much more difficult in the USA than in Georgia.
Q. How will US-Georgian business cooperation develop in the future? What are your expectations and the attitude of Americans towards Georgia?
A. The investment environment is bilateral. The main issue for investors is finding the right business opportunities, the right projects in the country that will bring benefits. I am optimistic that the recent political changes in Georgia we will manage to attract new investors and partners, and move the country forwards. We should keep in mind that America is far away, it is too big and finding partners will be difficult for Georgia. This is not related to the advantages or disadvantages of Georgia. Finding American investors is not easy. Everything depends on our entrepreneurs and businessmen. They have to find the right partners, do proper marketing, create a successful case and convince them to make investments, here in Georgia. Many do not realize that if Americans can earn the same amount in their own country they will not invest in Georgia. The only reason why they do it is for the diversification of business or higher ROI. We must remember that we are not the only ones; we are one from around 140 countries in the world.
Q. What will the main challenge be for the Georgian economy and your company in 2013?
A. We frequently hear that access to cheap credit resources is important for the country. We cannot blame the banks for that because financial resources are expensive for Georgian banks due to the global economic problems. Expensive credit is consequently hampering business development. Handling such high interest rates would be really positive sign. Political stability is a significant factor. We have successfully carried out elections without any conflict or mass protests and that was a very good message to be delivered to the international world. After the past 15-20 years Georgia has finally, lawfully changed government.
The third main factor is moving the country in the right direction. I cannot see any left-wing power in the current government so I am optimistic that Georgia will maintain a course towards the west. The fact that the current PM has a business background is a positive sign. It means that he does understand how to develop business and better business environment the country. The European crisis will most probably have its impact on Georgia. If the recession escalates it will firstly influence the banking sector and the result of that will be more expensive credit resources.
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