Unit Group is a young group founded at the beginning of 2007. The group brings together three companies – P3 Information Technologies, Alexa Software Services and Jobo Human Capital. Its main endeavor is providing IT services to customers in Israel and abroad, but the group's primary target group is the international market. We met with Adam Beck, president and founder of the group, for a talk about its unique operations, Israel's potential to turn into an attractive offshore country (i.e. a country that supplies quality manpower for international organizations), the advantages of Israel human capital in the international market and the differences between the companies' management and recruitment practices abroad compared to practices in Israel.
P3 is the most veteran company in the group and the basis for the entire group's founding. The company was founded in 2005 by Adam Beck.
Adam: At first we were just two people, myself and another worker. By 2006 there were already 12 of us and today we have 100 employees in the entire group.
What are the areas of enterprise of P3?
P3 is involved in three areas:
1. Consulting services abroad - exporting Israeli consultants for projects abroad
2. Outsourcing high-tech consultants to customers in Israel through long-term contracts
3. Providing IT systems maintenance service, taking comprehensive responsibility for the customer, SMB with specialization in high-tech startups
Why did you decide to turn to the international market?
The market in Israel is a developing market, but there's no comparing it to the international market in terms of breadth and potential. Today the biggest IT integrators turn to the international market. After assessing the market we identified a number of interesting, hot fields where it would be possible to bring in Israeli human capital. The international market is also a lot more challenging, worthwhile and dynamic.
Does this have something to do with the state of the IT market in Israel?
The market in Israel is less appealing. Today there are five large companies controlling two-thirds of the Israeli IT industry. All of the other companies are fighting over the remaining one-third. It's a very tough, competitive and price-directed market that has not yet come to realize you have to work in a more dynamic way and with less complex processes.
From left to right: Adam Beck, president of the group, Gideon Drori, COO of Alexa, Orit Forman, human resources manager, Ira Zichrov, recruitment coordinator, Moran Koren, vice president of development
Why is it worthwhile for customers outside of Israel to employ Israeli consultants?
We believe that Israeli experts offer an added value in the international market. The Israeli expert has a very professional, good image abroad. He speaks foreign languages and generally has a college education and extensive professional experience.
What advantages does the Israeli expert offer compared to his European counterpart?
The Israeli expert has greater breadth. The project management doctrine in Israel is different from that found abroad.
Outside of Israel experts are depth experts. They specialize in a certain field and that's it. In Israel, generally the expert has to expand into various fields. Therefore the Israeli expert understands a broader range of modules and applications projects. This is a very significant advantage. Also, compared to a local European expert, the cost of an Israeli expert is still reasonable.
How is this carried out? Does the Israeli employee have to relocate?
We don't favor relocation, but rather including Israelis in large, highly regarded projects abroad. We take high-level Israeli consultants with extensive know-how and experience in advanced areas of high tech (systems, CRM, ERP, Amdocs systems, information security, software integration) and send them to projects of a set duration, ranging from three months to nine months.
What is your volume of activity in this area?
So far we've been involved in eight projects in several countries, primarily SAP projects. Today there are many projects at international organizations being carried out in Eastern Europe and Africa, where there is a lack of local manpower in certain fields. We complement their capabilities in the area of professional manpower.
Why is it worthwhile for an Israeli consultant to head out for projects in foreign countries through you?
We're known among the consultants in the market as a company that knows how to do projects abroad, and now we're receiving inquiries initiated by consultants, especially SAP experts who are less challenged in Israel and want to improve their level of challenge and compensation. We give employees a winning package: professional challenge, international experience and high compensation. We've made this our primary field since 2006 and today we're among the only organizations in Israel involved in this field.
Why do foreign customers prefer to use your services rather than hiring consultants directly?
Organizations outside of Israel have difficulties evaluating the consultants' skills and the reliability of their resumes. P3 is located here, is very familiar with the market, does the screening for them and provides them contractual and legal backing. We currently have framework agreements with 15 organizations in Europe and there's an increase in the number of foreign organizations that recognize Israeli potential and work with us, because we've proven ourselves to be dependable.
What's the main difference between recruiting processes in Israel and those in Europe?
The best I could hope for any organization in Israel is that its decision-making process regarding an outside consultant takes two days, with two phone calls. In Israel the recruitment processes are very long and complicated. The foreign market is more focused on results, whereas in Israel the focus is on processes. In a dynamic environment like ours there's an enormous turnover. The current processes in Israel are superfluous and uneconomical.
* * * * * * * * * *
Alexa Software Services is the largest company in the group. Ninety percent of its operations is for foreign customers.
What is Alexa's field of enterprise?
Alexa's main activity is providing software development services for foreign customers through offshore arrangements. Alexa also provides software development services for customers in Israel.
What does the term "offshore" refer to in the job market?
The offshore industry got started ten years ago in the US due to the lack of manpower in the area of software. When large organizations searched for alternative sources for talented human capital at competitive prices they came to India, which is now the world's leading offshore country. In the field of software, in the year 2010 the offshore industry is expected to reach a level of $30 billion, with an annual growth rate of 15%. The leading players in this field are India, Eastern Europe, Ireland, China, Argentina and Thailand. But along with the growth there are also side effects - high employee turnover, rising prices, cultural gaps, social and economic deregulation, etc. So now is the time to create more offshore places.
What is the potential for Israel to turn into a well-known and attractive offshore country?
We see Israel as a very competitive alternative to the existing players. International organizations are looking for regulated providers that speak English, with competitive prices and quality, educated human capital. We believe the State of Israel can provide a solution, which is why we founded Alexa. Today Alexa, to the best of my knowledge, runs the top offshore service in Israel.
Still, this activity is very new and limited in scope. What kinds of problems have you encountered along the way?
We have to deal with all the problems of market pioneers, most of all the task of positioning Israel as an offshore country and creating added value for our foreign clients.
According to the Gartner Report (Gartner is the world's largest IT research and consulting company) Israel is the fifth-ranking offshore country in the EMEA region (Europe, Middle East and Africa), which puts it ahead of offshore veterans like Russia and Ukraine. Israel earned a high ranking in most categories - education level, infrastructures, knowledge management, information security, command of
languages - but we definitely have shortcomings, including Israel's political/security situation and the lack of sufficient government support.
Alexa focused on breaking two main paradigms that halted the development of the field in Israel - costs and personnel availability. We created a business model that allows our customers to receive quality services at prices that can compete with India and Eastern Europe.
How have you done this? What is the business model you created?
The field of software development is divided into two types of activity. One is the core activity, where the expensive, high-caliber manpower is employed. The other is support activities, including QA, monitoring, assimilation and maintenance. These activities comprise most of the work that gets done. We offer the client support services, leaving the core activity in his hands. Thus the client controls the core and is not fully dependent on an outside provider, but at the same time is not involved in support activities, freeing him to focus on the primary enterprise.
How are these projects managed?
We work according to the SLA (Service Level Agreement) system of functional outsourcing, in which we run all support operations remotely, in Israel. We set up for the customers specialized development centers to meet their needs, and recruit and train workers. The employees are ours, the equipment is ours and what the customer receives is the outcome of our operations. We work with long-term contracts, which allows us to hire workers, train them and manage know-how in an efficient manner. We create real synergy between the customer's needs and what we know how to do here in Israel.
Who are the workers employed in this framework?
We employ and train Israel human capital from every corner of the country. A few months ago we set up a venture called Machshava Tova, which employs women from the charedi sector and operates in Bnei Brak.
What is the latent potential of the workforce coming out of the charedi seminaries?
Every year the State of Israel sends out 30,000 graduates from high-tech fields, including software. This is an enormous amount of manpower. The charedi sector numbers about one million people and a recent survey showed over 70% of the charedi sector is interested in entering the field of computers. We assessed this sector, forged ties with rabbis and set up Machshava Tova. There are a whole lot of seminaries and charedi colleges that train women in the field of software engineering and computer sciences, and these women don't have work.
Why is it hard for charedi women to fit into the job market?
In order for them to work, there has to be a suitable work environment. We've created an optimal work environment suited to the needs of this segment of the population. We went to rabbis and received their full support, on three conditions:
1. A charedi work environment in a charedi area
2. Only women
3. A workday of only six hours
These were the conditions and we agreed to all of them. A month ago we set up a first development center, providing output for a customer in Denmark, and we have several other customers in Israel. This field is growing and proving itself every day.
What are the advantages of employee women from the charedi sector?
The turnover rate of personnel in the charedi sector is 8% annually. With us it's 0%. We set up a special rabbinical acceptance committee and every worker commits to work for us for two years. Maximizing employee retention allows us to invest in this human capital, training these women, managing know-how within the organization and having assurances in terms of salary demands.
This type of venture is just getting started. What are the expectations for the future?
Our growth is very rapid. We're recruiting 8-10 people every month in this field. We're still getting started and we have a limited number of customers, but we have a large number of impressive customers for which we provide subcontractor services, both directly and indirectly, including Microsoft, Cisco, Lenovo, Epson, Sony, etc. I hope to increase this activity significantly in the coming six months.
The third company is Jobo, a placement company that provides services for 50 customers in Israel, including the group itself. An independent company with its own customers and its own operations.
What are your recruitment channels?
We have three recruitment channels: 1. External sources, including websites like Jobnet and placement companies supplying a flow of resumes. 2. Headhunting - From existing pools we have 30,000 resumes, some of which were purchased from organizations that disbanded or went bankrupt. 3. Networking - Professional forums, communities, social networks, specialized forums. This field is in the process of rapid growth and this is where we're headed. Most of the workers we recruited recently came through social and professional networking.
What are the advantages you offer workers who join your group?
The group is a very interesting enterprise that brings together highy professional personnel - senior consultants on one hand and entry-level human capital on the other. We're among the only organizations that know how to take a college graduate, train him, bring him into a job and two years later, allow him to turn into a consultant at one of our customer sites in Israel or abroad. In the event the worker fully exhausts his job in the group, we'll be able to see to his needs through our placement company, Jobo. This is a real opportunity, both for entry-level and high-level employees. We have 80 open positions and our projects are very interesting from a technological standpoint. Our fascinating, unique activity is right for anyone looking for a challenge, good compensation, opportunities for development and international experience.
What kind of a company is Unit Group?
A young, dynamic and warm company. We didn't grow into a hierarchy. We're in direct contact with all of our employees and are very attentive to their needs. We're involved in innovative activity that breaks existing paradigms, and at the same time we're a stable, solid company.
What is the group's approach to management?
I believe in interaction and abbreviating processes. We have a very flat organizational structure, except for the professional teams, where the structure is more traditional. My hope is to continue managing the group the same way, even if we double in size. I know a lot of companies abroad the size of a company like Ness Technologies where the management team is no more than 30-40 people, and it works great. That's what I want to do, too.
What's your forecast for the coming year?
Maintaining what we have and growth in the international market, both in offshore and consulting. Right now we have 5-10 consultants abroad at any given moment. Next year we plan to increase these operations substantially. In terms of recruitment the idea is to double the size of the company within six months, including expanding Machshava Tova operations. My vision is to turn the company into the number-one IT services provider, especially in the international market, using only Israeli human capital.
For the Hebrew Article