MFEC getting ready for regional role

The SET-listed information technology provider MFEC Plc is looking to acquire internet service providers and data centre businesses as it continues its mission to become a regional IT provider in preparation for regional integration.

Intense competition for top IT talent in the region will lead to higher salaries and could draw people away from Thailand, says MFEC president Siriwat Vongjarukorn.

President Siriwat Vongjarukorn says the company early next year will announce the second phase of its merger and acquisition strategy involving local data centre providers or ISPs to develop subscription-based cloud computing services as a new revenue stream.

Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided as a utility over the internet.

Cloud computing will enable MFEC to deliver software as a service (SaaS), charging subscription fees rather than licensing fees. Online service delivery will also allow the company to expand into international markets at relatively lower cost.

“Online service delivery will help us expand service revenue apart from consulting, software development and maintenance,” said Mr Siriwat.

“In the end, we aim to see service revenue take over from hardware revenue which currently contributes 60% of the company’s total.”

Earlier this year, the company spent 800 million baht acquiring and swapping shares with three local IT companies _ Business Applications Co (BAC), Motif Technology and SoftSquare. The company has also invested 20 million baht in research and development through cooperation with universities to develop voice recognition applications in the Thai language as its proprietary intellectual property.”In combination with three companies, we have more than 1,500 staff, and 80% of them are software engineers. This will make us strong enough both in scale and quality including a variety of domain expertise to compete in Asean Economic Community,” he said.

He foresees Asean IT companies will expand to Thailand, once the market becomes liberalised. “Those challenges have prompted MFEC to scale up in order to compete in the changing landscape of the market and tap into a vast opportunity in a regional market which is 10 times bigger (than Thailand).”

He also suggested that the government speed up its planned expansion of high-speed broadband throughout the country to make its infrastructure much more competitive.

Policymakers also need to find a quick solution to build up the skills of IT professionals to serve demand in the market, as the current shortage is pushing up salaries.

“The situation will get worse when the market becomes liberalised, as this will attract talented local people to move outside Thailand for better pay and better workplaces, particularly for international companies. This is a real challenge for SMEs in Thailand,” said Mr Siriwat.

He said the company also planned to provide training and build up networks with universities to reach 5,000 people by 2015, a number big enough to enable MFEC to participate in bidding for large-scale IT projects.

The company expects to achieve 3.5 billion baht in revenue in 2011, with 1.8 billion baht already achieved in the first half of the year.

“Demand for IT projects remains strong, as businesses need to invest to improve competitiveness particularly in banking, education and government,” said Mr Siriwat.

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