Samer Hanna is both a pioneer in Lebanon’s online economy and a leader in his niche, which, in simplistic terms, is the provision of outsourced information technology (IT). Hanna is chairman of two companies: Dubai-based Capital Banking Solutions (CBS), a banking software provider, and a holding that owns Beirut-based Capital Outsourcing (C-O), a specialist provider of IT and business-process outsourcing services.
C-O, which started in Beirut as a five-employee application service provider in 2000, today employs more than 75 people and hosts more than 800 active websites and applications on 200 servers in its datacenter. According to Hanna, “over 25,000 users access applications and websites in our cloud environment from different locations including, but not limited to, Lebanon, France, Qatar, Iraq, Bulgaria, Romania, Hungary, Jordan, United States, Syria, and the United Arab Emirates.”
From outsourcing and consulting activities alone, not accounting for the revenue of CBS, the group generated “over $7 million in revenue in 2011. We expect around 10 percent revenue growth in 2012,” Hanna tells Executive.
The market conditions for C-O’s corporate growth may indeed be solid given that, as Hanna says, “we thrive on recessions and on crises. People look to outsource when they don’t want to spend money. When there is a slowdown or crisis in the economy people think to improve on what they have so that they are ready when the economy picks up again. We provide them with ease to migrate to us at very low cost and when the economy picks up again, we help them scale up again very quickly.”
The C-O offering relates strictly to IT demand for data and application hosting, or providing disaster recovery services. The companies that avail of the service are, by Hanna’s description, typically medium sized, with 50 to 200 employees, and operate in sectors such as finance and retail.
Larger corporations, such as major banks, in Hanna’s experience are not top-tier candidates for becoming an outsourcing client, given their internal IT departments have vested interests in defending their turf against external providers — such as an application service provider (ASP).
Then till now
When Hanna set up his first IT company in 2000 under the name Trinec, it lay claim to being the region’s first ASP. At the time, ASPs were the latest fashion in computing services by remotely providing customers with specialized IT programs via a network, and cheaper to rent than buy. Today, ASPs are generally considered part of, or linked to, the cloud computing sphere, which operates under the same basic principle but has a wider scope.
As Hanna confirms, the business model of his venture has essentially remained the same but the company has developed in several ways, notably in the creation of the consulting arm, which has a lucrative market in providing expertise on Microsoft infrastructures to clients that include public sector entities and telecommunication corporations, companies such as Etisalat, Du, and Mobily.
C-O creates a career path for its IT experts; they are recruited as career starters and stay with the company after they build their skills and experience because the consulting activity offers them more interesting and financially rewarding work, with the company also using this diversification to substantial economic gain. “The consulting company contributes less than 30 percent to turnover but more than 50 percent to the bottom line,” Hanna says.
In terms of client base split, C-O serves mainly Lebanese clients with its data center and outsourcing expertise from Beirut, whereas the consulting arm, set up as a Lebanese offshore and staffed wholly by Middle Easterners, competes only for business from international clients.
Along the path of change and growth, the group entered into business partnerships and mergers with several other IT players, including the alignment with the specialized banking software business through CBS. The business partners at one point migrated the group’s legal seat to the Dubai International Financial Center and added several international addresses to the group’s profile of office locations.
Direction for the future
After an exercise in restructuring ownership in 2012, the two entities are currently refocusing their business lines. While C-O is anchored in Lebanon and looking at regional growth opportunities, CBS is serving banking customers in African markets through a Paris-based unit, in Caribbean and Latin American markets from a base in the United States, and caters to a sub-niche of private banking from an office in Monaco.
For C-O’s business growth, Hanna sees “still a lot of work in the Lebanese market to consolidate our position as leader in this industry here.” At the same time, he would hardly be an entrepreneur and business mind were he not to add that C-O has potential to “export our ‘knowhow’ on a partnership basis to people in countries around us.” These potential business partners are people that C-O is in contact with and who can benefit from C-O’s experience, knowhow and people, he adds.
One of the few persistent challenges that C-O appears to have come up against without too much prior success is the rather dull nature of doing corporate IT business. “We are not a sexy company and we are not a company with a service that is easy to understand for the layman,” Hanna admits, adding that the company recently launched its first advertising campaign in several years. Using an over-the-top image of whiny baby-esque employees, it was a disruptive campaign with the aim to first attract attention and second “we wanted to humanize the image of the IT service that we provide.”
At a time when the Lebanese market has just gone through a shock of internet connectivity failures, and the scare of the hyper-sophisticated information theft virus, Flame and Gauss, which specifically struck Middle Eastern countries and were discovered only a few weeks earlier, the importance of data security and disaster recovery are certainly areas where the ground should be fertile.
As Hanna observes, the attitude of companies in the Middle East to the issue of data security has changed in his favor when compared with the beginnings of ASP services in the region. While company owners 10 years ago were afraid for safety of the data they were going to outsource, today they outsource because of fear for the safety of their data if they are kept online in their own systems, he explains.
A security breach at C-O “at some point in time would be very harmful for us,” Hanna admits, but says that the company’s exact expertise resides in anticipating and averting IT problems. “The potential of a security breach is a challenge for us and we take it very seriously but it is not a threat,” he claims.
Virtually defining IT as “full of problems and when you have a problem you need someone at the other end of the line who can solve your problem immediately,” the chairman of C-O approaches IT troubles perhaps in the way that a professional animal wrangler would consider his gators or lionesses.
That leaves one professional longing of note that Hanna hopes to see realized after many years of waiting. “I think we need competition. Competition will open up our market and help our market grow and help us educate the market,” he says. “I have been hearing for the last 10 years about companies that wanted to enter the market and do the same [thing] we are doing and haven’t see anybody coming in. I want competition. “You only get better if there is competition.”