Goran Kalanj: We receive offers from abroad, but we reject them because with large investments come large expectations

The Fiyu platform, software from the Croatian IT company Serengeti that significantly accelerates the development of a wide range of business applications, was launched on the market last year and immediately found a buyer in America. In the American market, the company collaborates with HR Prodigy, which develops a human resources management system for public institutions. Serengeti, by the way, is engaged in custom software development and has participated in over three hundred projects over the past ten years. Founder, owner, and director Goran Kalanj talks about how they got a job in America, what he expects from that market, and how the company he founded just before the major economic crisis survived and quickly developed into a medium-sized and large software exporter by opening several offices in Croatia, the region, and Kenya.

What kind of references should a company from a small country have to compete with the largest software companies in America?

– Serengeti has been operating for fifteen years, and our clients come from various industries. We initially worked in the Western European market, which is quite demanding, but the American market is even more demanding for the development of business applications, so we took it step by step, from Europe to America. The company must have very good references, specifically in the domain the customer is engaged in, satisfied clients, and recommendations. Domain knowledge is the most important.

How is the American market more demanding than the Western European one?

– On one hand, it expects more from partners, expecting higher quality, creativity, and engagement, while on the other hand, it is more rewarding because decisions are made faster than in Europe. They enter projects very quickly, which is good for us, but the criteria for selecting partners are quite strict because the competition is greater; more companies from various parts of the world are trying to get jobs there. If you impress the client, you quickly start collaborating; in Europe, it is slower, and the decision to proceed with a project is analyzed multiple times at various levels. Americans are much more proactive, and when they see an opportunity, they simply go for it.

What is the price of your platform compared to similar American companies, and what role did it play in negotiations?

– The license price for the Fiyu platform depends on the size of the customer: for smaller companies, it is $226 per month, and for larger ones, it is $908, which is in line with competitive solutions on the market. The price itself was not such an important factor in winning the job; it was much more important to show clients how much the platform accelerates their development. When we demonstrate this on some pilot projects, clients see that it justifies the price they pay. Therefore, we have never had a situation where price was a limiting factor.

Who are your clients, and from which industries do you have the most?

– We mostly work with banks, the tourism sector, the manufacturing industry, and energy.

In which markets do you operate, and what is the share of exports in your revenue?

– We operate in Croatia, Serbia, and Slovenia, but most of our clients are in Germany, Austria, and England. We have clients in Sweden, Denmark, and America, but Western Europe is our strongest market in terms of revenue. Some export jobs are realized with the help of partners in Croatia, and from that perspective, more than eighty percent of our revenue comes from exports. However, if we look at what we directly invoice abroad, then exports account for about fifty percent.

What revenue do you expect this year, and what do you expect from the American market?

– We started with the American market last year, we have two clients there, and this year we have the potential to gain new ones. Revenue will be significantly influenced by business in America, and the market in Western Europe has also opened up quite a bit, so we expect a thirty percent revenue growth this year.

In 2020, your revenues fell even though the IT industry grew considerably during the coronavirus pandemic. Why did this decline happen to you?

– That year, revenues fell slightly; we ended it with a slightly lower revenue compared to the previous year. This was a consequence of the pandemic because our largest client is the financial industry, banks, which were the first to be hit by the crisis, which is why they reduced IT investments during that period. By 2021, it recovered, and we grew.

It is not common for IT companies to open offices in Africa; you opened one in Kenya. How does this fit into Serengeti’s business strategy?

– Our employee base is in Croatia and two neighboring countries, where more than ninety percent of all employees are, and that will remain the case in the future. We chose a remote location where we could rely on hiring engineers to support our projects. We looked for a similar time zone. Africa is interesting; Kenya is only one hour’s time difference from Croatia, and they have good universities. It is the center of Africa in terms of education and quality of the workforce, which was our main motivation. European presence there is significant, which is why we chose that country.

How many employees do you have in Kenya?

– We have a team of six people.

What is the cost of labor in that country compared to Croatia, and what is the difference in salaries between local and Croatian programmers?

– Salaries in the software developer market are constantly increasing, and the trend is that they are equalizing among countries. In Kenya, salaries are about fifteen percent lower than in Croatia for the same level of expertise. They are not much lower because today a good developer from their country can work for a company anywhere in the world.

Have you experienced employees blackmailing you for higher salaries to stay in the company, or have you been offered someone from another company who sets conditions because they may know you need people for some job?

– Yes, but it is not blackmail; people are aware of their worth, how sought after they are in the market, and what their knowledge is. Their knowledge is valuable because reaching a high level of software expertise requires education. It is neither simple nor quickly acquired knowledge, so they have to invest a lot in themselves, and accordingly, they approach companies that want to hire or retain them. And that is perfectly fine. Is it more challenging every year? Yes. One of the reasons we started looking into neighboring countries is so we can be more flexible in seeking quality experts. The market for software services is increasingly valued and becoming more valuable, but clients are willing to pay for it. Therefore, we will also be able to follow these trends and the demands of local software experts for higher salaries in Croatia; we will be able to charge clients for it, making it a sustainable long-term story.

Are there offers for selling the company?

– Larger foreign IT companies and major well-known investment funds are interested in investing in or fully acquiring. We are not focused on that because accepting investment would mean we receive significant amounts of money for the company’s expected very large growth. Serengeti is already growing by twenty to thirty percent each year, except for the crisis year of 2020. A growth much larger than that would mean we have to make compromises in the quality of building the company, and we do not want that.

Read the entire interview in the printed or digital edition of Lider.