About the author
There is an interesting piece of news floating around the RSS waves. Jawwad Farid of Alchemy Tech ran some rough numbers on the number of employees of companies and profitability analysis to come up with a grand index of IT companies and their revenue.
The effort is noble – it must have taken some work to put it together, and the industry certainly needs a list like this.
But I will point out the list is often inaccurate. Most of the inaccuracies come in mis-guessing the number of employees. Some of the companies on the list actually dropped down to 20-30 range in the last year, and a few of them right-sized because of cashflow issues.
Second thing I’d point out is “number of employees” is not necessarily any measure of growth or success. I agree it can describes a “minimal benchmark” that the firm must be making to keep their employees, but most consulting firms (actual consulting firms) are effective as small highly focused group of experts — these can often make more money than a large development shop.
Also, a number of companies that are doing sizable business (in local terms) are actually working in a thin model where they outsource practically all deliverables to their “core” freelancers or partners.
Intel is great example of this — they have some 8-10 odd employees but naturally they’re doing well here. This is because partners do all fulfillment, retail management, marketing and more.
Finally, the list judges all information workers equally. Integration companies like Xavor and PiSigma are charging much higher rates / hour than PHP dev companies, even with the same number of people, just because Integration is more specialized.
Similarly SAP / Oracle or more specialized work will earn more; companies with architects as their core asset will earn more than offshore dev factories etc. etc.
Ofcourse, we all understand that this list was just the alpha release — can’t wait for the full release.
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June 28th, 2007 at 11:10 am
Osama
Thank you very much for the note and the free press
Completey agree with your analysis. I think product focused companies will always have a higher valuation and/or profitability potential. One of the benchmarks that I have used often for product companies is a million dollars in gross for every 30 employees. But there are companies that break that benchmark depending on where they are in their product life cycle.
For example Pixsense right now is doing beta’s and pilots. Their gross number right now is most likely fairly low. Give them two years, a few regional rollouts, customer adoption and presto 10 dollars a customer a year in a market like China, India, Indonesia, Brazil or North America and they will be worth more than PTCL, Mobilink, Warid and Telenor combined.
Similarly on the integration side a great example is NCR. With 250 plus employees they do more than 20 Million US a year. They are not on the list because I didn’t classify them as locals.
Putting together the list was fun. Getting it seen critiqued is even more fun. Please feel free to send me as many corrections as possible, as soon as possible, so that we can do the beta release as early as the next few posts.
Jawwad