Upon our Q3 interim report, I noticed a post on the Inderes IT service sector discussion that quoted Warren Buffett who allegedly once said that a low tide reveals who has swimming trunks on. Last summer, the low tide did sneak up on our sector that has enjoyed the post-pandemic demand peak for quite some time.
Before our Q3 results, we sat down to remind ourselves and the investors of the factors, thanks to which we not only have our trunks on tight, but also as to why we have managed to grow. The Inderes post specifically discussed subcontracting, which brings flexibility in a weak or foggy market situation – means that is no stranger to any IT service company, but in the utilization rate of which there are differences. For Gofore, it was 18% of net sales in Q3 and is absolutely an important way of managing the expertise “basket” in changing situations. However, our trunks are not held up only by controlling subcontracting.
In addition to persistent digitalisation work, we are carried by our strategy that we firmly believe in. Last December, we decided to focus on our two main customer categories, Digital Society and Intelligent Industry. We strive to build strategic, long-term customer relationships within these, bringing in recurring net sales. We also have an exceptionally wide offering that crates customer value across business area lines.
On the strategic choices are built our long-term differentiating factors. Gofore has a good reputation that has been built over 20 years, as a trusted partner for both the public sector and the digitalizing industrial sector. A position like this helps maintain a profitable price level even in tight competition without aggressive pricing. Our selection also supports sales and developing customer relationships, and a wide variety of expertise often gives us good quality scoring in tenders. Our long, experience-based skill of making high-quality offers also helps win tenders.
The shoemaker’s children can of course not go barefoot. When talking about our competitive advantages, we must mention our own digital platform that helps effectively plan for profitability and talent, e.g. in recruiting directly for customer needs. Digitalisation also enables the exceptional disclosure transparency (and level of detail) we have chosen. Especially in an uncertain market, one has to be able to point out which factors build a company’s success or failure, and we publicly share most of the information our data gives us.
The strongest factor holding our trunks up is, however, the Gofore community, which is on average better off than a Nordic peer comparison index. This does not mean to say we are immune to weaker times; our employee net promoter score was 34 at the end of September, whereas it was 51 going into summer. Over the fall, our focus has of course shifted to maintaining profitability, which has brought the promoting willingness down, partly due to the low spirits of the entire industry and the related preparedness action we have taken.
However, a strong culture builds resilience in a more difficult market. Gofore’s success is a shared success, supported by e.g. profitability-related salary models, own collective agreement and staff share ownership. I would also add interactive internal communications, where anyone can also publicly express concerns and they are also responded to in every way possible to us as a public company.
Gofore’s trunks are firmly on.