Business success stories from Portugal are in short supply right now, as the country struggles with austerity measures implemented so that it can pay back its 2011 bailout package from the EU, the International Monetary Fund and the European Central Bank.
While the deepest cuts are being felt in the public sector, the view from the private sector isn’t pretty, either. The corporate tax rate stands at 31.5%, compared to an average rate across the European Union of 23.5%. Bank lending comes on eye-watering terms and few businesses qualify. With unemployment affecting 18% of the working-age population, and 43% of the country’s under-25s, consumer spending is in the doldrums.
It is against that gloomy backdrop that a small, Portugal-based technology start-up called Webdetails was acquired in April by a larger, US-based start-up called Pentaho Corporation.
On the face of it, it’s not a deal that will shake the IT industry to its core. Pentaho isn’t one of the biggest names in the BI tools market and the Orlando, Florida-based company doesn’t disclose financial results, so it’s hard to gauge its size or success. Terms of the deal were not disclosed.
However, Pentaho has raised $55 million in venture capital funding since it was founded in 2004 and industry analysts rate it as a pioneer in open-source ‘big data’ projects, offering a range of tools that integrate closely with Apache Hadoop, as well as the major enterprise distributions of Hadoop.
Either way, the deal is great news for Webdetails and for its CEO and founder Pedro Alves, now senior vice president of community at Pentaho. “What are the chances that some guy from a random, bankrupt country would get the opportunity to work in a bigger universe like this?” he jokes.
Alves established Webdetails five years ago, when things were going badly for him with a former employer, his wife was out of work and his son was just two years old. To his credit, he shrewdly identified a gap in the Pentaho portfolio - data visualisation - and has built a 20-strong business out of building and implementing extensions and plug-ins that enable Pentaho customers to present data to business users in meaningful, compelling formats: dashboards, charts and graphs, for example.
Pentaho liked its approach so much that it bought the company, trading partnership for ownership.
Alves says that the IT skills he can recruit in Portugal are some of the best available worldwide. Many of the company’s developers come from Lisbon’s IST (Instituto Superior Tecnico), Alves’s own alma mater, while its implementation specialists, from a wide range of maths, science and engineering disciplines, are drawn from Lisbon’s universities, as well as the University of Evora, in the more rural Alentejo region. They are based in the company’s offices near the pretty seaside town of Cascais, around 30 kilometres from Lisbon, while Webdetails’ user experience (UX) team is based in Porto.
While Alves says he hates the term ‘nearshoring’, he concedes that, “being based in Portugal, it’s no secret that our rates are much cheaper than in the US or UK or Northern Europe, and most of our customers come from these markets.”
According to online salary research tool Payscale.com, the average wage for a software developer in Portugal is EUR16,347 per annum. For an IT project manager, meanwhile, it’s EUR27,348.
At the same time, however, many young Portuguese people are following the longstanding national tradition of emigrating in search of new opportunities when times are tough at home. Around one in ten graduates leave the country after completing their studies. In total, between 120,000 and 150,000 are believed to have emigrated in 2011 and the figure is rising, knocking a big hole in a population of just 10 million.
This ‘brain drain’ is a big problem for recruiters, according to Diogo Rebelo, CEO of DRI Global, another Portuguese BI company that has built its business on open-source technologies. Like Webdetails, many of DRI Global’s most talented developers come from IST, while management school ISCTE-IUL (Insituto Universitario de Lisboa) has provided a steady stream of top-class business analysts. But for how long?
“[Young people] watch the news on TV and they become frightened for their future, so the country is losing some of its most talented people,” he says. “And we can’t compete with the salaries they might be offered elsewhere, so it’s not easy to get the skills, even with unemployment the way it is.”
Still, despite these problems, both Webdetails and DRI Global are prospering. Staff at Webdetails are “very excited” about the opportunities that lie ahead for the company as part of Pentaho, says Alves, while at DRI Global, Rebelo is about to open an office in Germany, in addition to its existing offices in Lisbon, Madrid, Copenhagen and New York.
Jessica Twentyman has written about business and technology for some of the UK's major business and trade titles, including the Financial Times, The Guardian, the Wall Street Journal Europe, Director, The Register, Computer Weekly and Retail Week.
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