The FINANCIAL — UGT, the leading IT infrastructure solutions provider in Georgia will supply the ATM network of Kazakh owned Halyk Bank Georgia. The company said meanwhile that its daughter company EnSol will start importing solar batteries from China and Great Britain before the end of 2008. “If you think in the long-term as large investors do, in 5-10 years time Georgia has huge investment potential,” says George Chirakadze, President and CEO of UGT. In this interview with The FINANCIAL he speaks about the company and analyzes investment climate in Georgia.
“The recent war and the post-war period have had negative effects on the banking sector. Nearly all of them had to decrease the number of investments. Of course it had a negative effect on our operations too because some of our largest clients are banks,” George Chirakadze, President and CEO of UGT, told The FINANCIAL.
“We feel that if everything continues normally, next year we will have recovered and we’ll very soon get back to our fast growth rates. UGT will definitely have growth this year because we’ve done a lot of projects so far. We’ll probably have a 60-70% increase this year. Next year is very hard to predict. I think that November-December will show us the real results,” George Chirakadze, President and CEO of UGT, told The FINANCIAL.
“Banking technology is our new business direction. UGT is the exclusive representative of Diebold in Georgia. It’s not only about the revenues. We want to have more customer based technology and higher quality products. Halyk Bank wanted to get the best systems which would offer the highest quality service. So they decided to go with Diebold,” noted Mr. Chirakadze.
Halyk Bank Georgia started work in spring 2008 and became the 22nd bank operating in Georgia. It was founded by one of the largest Kazakh banks – Halyk Bank. Preference was given to UGT’s technical/financial proposal for ATM purchase. Halyk Bank’s non-deposit ATMs will be provided by UGT.
Diebold, Inc. is the largest U.S manufacturer of ATMs. It is engaged primarily in the sale, manufacture, installation and service of self-service transaction systems (such as ATMs), electronic and physical security products (including vaults and currency processing systems), voting machines, and software integrated systems for global financial and commercial markets.
Today German Wincor Nixdorf (former Siemens’ branch) and American NCR are the main suppliers of ATMs in the Georgian market. Wincor Nixdorf holds 70-80% of the market. Leading Georgian banks TBC Bank, Bank of Georgia and VTB are using Wincor Nixdorf ATMs.
Halyk Bank is UGT’s second such project. Its first project of ATMs was with Cartu Bank. UGT expects the partnership to expand with Halyk Bank.
“One of the biggest issues that we see now is increasing energy cost. Costs for oil, gas and electricity are problematic not only for Georgia but for the entire world. It’s getting harder for households and companies to pay for large expenses. We saw an opportunity especially for the corporate clients to be provided with new energy solutions and EnSol is that energy solution. These technologies will enable our corporate customers to decrease costs, increase efficiency and save money,” the president told The FINANCIAL
“We decided to go to the green energy market. Green energy is very popular in western markets. As the prices on oil were growing in the last months everybody understood that was the future. After searching for different vendors in this area, we found vendors in Great Britain and China. Great Britain’s products are of higher quality and are more expensive while Chinese products are much cheaper. This enables us to diversify. The prices of energy solutions will be customized for our individual corporate clients, depending on their office building, operations and infrastructure.”
UGT was established in 1997. Today the company is the leading system integrator and provider of solutions in the field of information and communication technology in Georgia. UGT primarily concentrates on providing services to corporate clients and the government sector.
The core business of UGT is the implementation, deployment, and support of solutions that are based on information and communication technology products and services. UGT is also known for the provision of high quality computer equipment and accessories.
“Our mission is to assist our customers in reaching their goals by providing them with information and communications solutions based on modern technologies, products, and services,” said the CEO.
UGT is primarily concentrated on providing service to large corporate customers and government sectors. Currently, there are six business divisions in the company: Consulting and complex projects; System integration; Business software systems; Implementation and development of software products; Hardware and software; Training, consulting and supporting.
The list of UGT’s customers includes a wide range of organizations and industries including banking-financial sectors, state defence and security, telecommunication, healthcare, education, construction, distribution, retail, etc.
“We started in 1997 and in that time UGT was a very small company with only a couple of employees. We started as a dealer of Compaq which was at that time a pretty well known brand name. After that we signed a contract with Microsoft, Oracle, Cisco, IBM, HP and other successful companies. At that time all these vendors were not present on Georgian markets. They of course realized that this wasn’t a huge market, but this was an opportunity to think in broader terms,” the CEO told The FINANCIAL.
“When we started working with Compaq we showed good sales results despite being a very small company. We sold Compaq’s products to their global customers such as Philip Morris and Coca-Cola. There were governmental organizations too such as USAID and the U.S. Embassy. By 2000 UGT was a much more solid company and we offered products in lots of areas not only hardware.”
The partnership between Microsoft and UGT started in 2000. Since then it took UGT a couple of years to receive Microsoft’s highest partnership status (Microsoft Gold Certified Partner) for the first time in Georgia. At present, besides the status of Microsoft Gold Certified Partner, UGT also has the status of Microsoft’s Business Solution Certified Partner and is the only company in Georgia authorized to make Microsoft’s corporate agreements with large organizations. Besides, at Microsoft’s order, UGT also created Georgian versions of Microsoft Windows XP, Windows Vista and Microsoft Office 2007.
“As you know Georgia stands at the crossroads of the Caucasus and Central Asia and when you start business here you have a potential market of more than 100 million consumers, which is an important comparative advantage that influences investors. They saw a potential in UGT to become their solutions provider in Georgia and this was a key to their decision.”
“Without a doubt Georgia has a unique location. Russia is trying to break Georgia economically and you can clearly see that. Georgia has a lot of opportunities to grow economically. Before the war there was huge growth in Real Estate, the Banking Sector, Insurance markets, etc. The biggest issue for Russia now I think is that Georgia can be economically independent.
The reforms that were made through the last years have really had a great impact on the country’s development. Plus we were very lucky to get such big aid from the EU and USA. If you look at Ukraine now they are having much tougher economic problems than Georgia does. Their stock market is close to crashing. If Georgia uses the huge economic aid that it got wisely we can recover much better than most of our neighbours, including Russia. Russia is losing right now USD 2 billion a day. In couple of weeks they could be having a huge catastrophe. So Georgia needs to be really smart to take the right steps. Definitely it will be hard, but it will be less painful for us than for our neighbours. For instance, if we look at Azerbaijan the country is having huge problems right now. When you get used to USD 140 per barrel of oil and now the price is USD 65 per barrel you have to cut in half government spending.”
“If we look at Russia today we look at an unpredictable country. You never know what a country will do when it’s going to default. Russia is going to default if they don’t change something. They have reserves of USD 500 Billion and they have already lost USD 150-200 billion. The price of oil is going down. Russia has an oil based economy, it’s huge and you can’t so easily stop the outflow of money. The last war initiated by Putin in Chechnya was surprising because Russia had serious internal problems. Russia has so many internal problems now that they could take them out and concentrate them somewhere else. I hope this doesn’t happen. The good part is that we now have international observers here and this will help us a lot.”
“The U.S. trade mission is very important for Georgia in such harsh times. We couldn’t even dream of such big companies as General Electric (GE) thinking of investing in such a small economy as Georgia has. If there will be right investment steps made at the end of this year and the next two years it could be incredibly beneficial for our economy.”
“The banking sector in Georgia is one of the strongest in post-soviet countries. Telecom and IT is a very attractive sector. Healthcare and construction have quite big potential. If you think in long-term as large investors do, in 5-10 years time Georgia has huge investment potential. Agriculture is also very attractive for making long-term investments as there are many opportunities.”
Among UGT’s projects are: The Ministry of Finance – Server Migration Project; Implementation of high-fidelity computing systems for the United Financial Corporation (UFC); Consolidated Data Storage Infrastructure at Bank Republic; Georgian Card – Data Centre Modernization Project; The Ministry of Finance – Building of Engineering Infrastructure for Data Centre; Information System Implementation for Management of the Ministry of Defence; Patrol Police Communication Pilot Project for the patrol police mobile groups; Georgian Windows XP localization project; implementation of integrated database and corporate web-portal for the Ministry of Finance; and others.
Written By Levan Lomtadze
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