Developer Tools & Open Source

Luxoft: Businesses Seek Near-Shore Partners as Complexity Intensifies

By Paula Bernier, Executive Editor, TMC  |  November 02, 2016

Plenty of companies outsource their software development to remote parts of the world, namely India. But, increasingly, as their requirements become more complex, organizations are looking to near-shore software development.

That’s the word from Luxoft, a 16-year-old entity with more than 11,000 employees around the world and facilities in Bulgaria, Mexico, Poland, Romania, Russia, the Ukraine, and Vietnam.

Businesses can easily outsource software development work related to their Oracle, Salesforce, and SAP (News - Alert) solutions to India, said Patrick Corcoran, Luxoft’s global director of analyst and advisor relations. But because business units within companies are now buying services, organizations need help with customer experience, digital transformation, mission-critical, and network functions virtualization projects, he added, and all of that is complex. Luxoft has the experience to help customers with that complexity, he said.

Eighty percent of the company’s delivery professionals have 5 or more years experience in outsourcing, and 75 percent of them have a master’s or higher-level degree, he explained. Meanwhile, he added, one to three years of experience is the norm at outsourcers like those in India.

Engagements with network equipment manufacturers that need to change to better meet the requirements of their communications services provider customers that are increasingly adopting the cloud, containers, and virtualization are among the kind of work Luxoft is focused on lately, said Tomy Issa, executive director of network architecture and business development at the company. Luxoft also sometimes takes over the work on these companies’ legacy solutions so they can focus on what’s next, he added.

When Luxoft started dabbling with open source standards and got into the NFV and SDN game, he continued, the company started building its own open source tool and created conformance tests and network integration solutions. Luxoft is working Cisco (News - Alert) Systems, Cobham Wireless, Juniper Networks, Spirent, and Telefonica to create a software-defined lab for automated testing of next-generation solutions. The automation allows for quick integration and rapid testing, he said.

Luxoft was spun off from IBS Group in Russia a few years ago when clients began requesting engineering skills that were not available in India and other parts of the world, said Corcoran.

“We are strongly undervalued by the market as our company combines two investment cases, which are interesting for different investors,” IBS Group President Anatoly Karachinsky said in November of 2012. “One is IT business in Russia, and the other one is the so-called offshore software development for large Western companies, under the Luxoft brand.”

That was seven months before Luxoft made its debut on the New York Stock Exchange under the LXFT ticker symbol.

Today Luxoft’s client roster includes Aepona, Alcatel-Lucent (News - Alert), Alstom, Amargo, AMD, Astelit, AT&T, Avaya, Boeing, Bosch, Catepillar, Citi, Continental AG, Credit Suisse, Dell, Deutsche Bank, Elastic Path, Ford Motor Co., FrameXpert, Harman, Hotwire, HP, Juniper Networks, Kaspersky Lab, M&O Systems, Medialogia, Microsoft (News - Alert), Modular Mining Systems, New York Media, News360, OB10, Oracle, Panasonic, Petris, PHH Mortgage, Polymedia, Power Jet, Promsvyazbank, Sabre Holdings, Sberbank, and TIBCO Software.

In August of this year, Luxoft noted that it’s seen a slowdown across its top three clients, but Corcoran said the company has $650 million in annual revenue and saw 25 percent growth last year and 31 percent growth the previous year. Meanwhile, in its recent quarterly report, Luxoft said it had U.S. GAAP revenue of $178 million, an increase of 20.3 percent year over year, and it talked about its expansion plans.

"This has been a good start to the new financial year for us,” said Dmitry Loschinin, Luxoft’s CEO and president. “We opened it by posting strong growth for the first quarter. For the remainder of the year we look forward to executing the initiatives we embarked on during the first five months. We expect that this year will be transformational for Luxoft, when we expand into new verticals and geographies and solidify our existing core verticals and global sales efforts.”

Luxoft’s three core verticals to date have been automotive, financial services, and telecommunications. But the company has expanded its horizons both through internal initiatives and via an array of recent acquisitions.

The company has done five acquisitions since 2014.

  • This July it bought INSYS Group Inc. That U.S.-based company provided technical consulting for companies in various verticals, including biotech, health care, pharmaceutical, and telecommunications. 
  • It acquired Symtavision GmbH in February of 2016. The German company offered automotive software tools and consulting services for architecture optimization, scheduling analysis, and timing verification
  • A year prior to that it snapped up Excelian. It was a private U.K.-based systems integrator and consulting company specializing in trading and risk management software for the financial services and commodities markets.
  • In October of 2014 Luxoft purchased U.S.-based IoT outfit Radius Inc. in October of 2014.
  • And earlier that same year it snagged Mecel Populus Suite, which had a tool chain solution for designing, developing, and deploying user interfaces for distributed embedded systems.

Edited by Alicia Young