SA services firms combine for clout
- 25 July, 2001 12:43
After getting a multimillion dollar injection, two South Australian services firms merged last week in a bid to compete with international players and breach the Singapore market.
South Australian Systems Services and IT Services Group joined forces and in doing so, attracted a multi-million dollar equity investment from Singapore government-owned firm, Commercial and Industrial Security Corporation (CISCO).
The combined company will operate under the name Vectra Corporation with combined revenues of $11 million as well as a staff of 50 in Australia and Singapore.
David Simpson, president of Vectra and former CEO of Systems Services, said the due diligence process forecasts revenues to reach as high as $18-$20 million within the first 12 months of combined operations.
"The numbers are looking good even with the flat state of the market," he said. "There is opportunity out there and we have a number of strategies in order to tap it."
"We needed to be bigger and the best way to achieve that was to get together," said Simpson. "We were going to set up a new company in Asia, which was to be part-owned by CISCO but decided it would suit everyone better if they invested in Vectra."
The combined services company is targeting the rapidly developing nations of East Asia, particularly security sensitive centres such as Singapore and Hong Kong, to drive its growth into the high demand service area of information security.
Simpson said the relationship with CISCO will assist in getting Vectra's foot in the door as business in these regions is usually relations-based. Systems Services struggled for two years as a newcomer in Singapore before it was able to win business against the likes of PricewaterhouseCoopers consulting, he said.
On the home front, Simpson claims the merger has broadened the company's skills set and created lucrative cross-selling opportunities. "When we combined our customer bases there were only five or six contracts that we were competing for," he said. Simpson also believes the lure of gaining additional services from a reputable source will see many customers ditching other providers and feeding the business to Vectra.
The two companies have moved swiftly to combine offices in Adelaide and get employees working on joint projects to shake the "them" and "us" psychology. The transition has been achieved with no redundancies and Vectra anticipates a 20 per cent increase in staff numbers over the next 12 months.
Founder of IT Services Group Chris Smerdon has assumed the role of managing director of Vectra.