I work myself in the IT sector as a consultant and would like to invest in the same industry. According to my own research, at least the following companies are on the stock exchange: Vincit, Innofactor, Gofore, Digia, and Tieto. Possibly others as well. Have others invested in these? Which of these companies will make the most money in the future?
The reason why I would like to invest in the IT sector (even though someone told me not to invest in the same place where I work, because if things go worse, both the job and the investments will be lost) is that coders are really making a lot of money right now. If you can code, you are immediately sold to clients at a good price as a consultant. I would really like to be part of this wave.
What perplexes me is how Innofactor can be so bad… other coders are snatched up left and right and can ask for anything for their work, but if you go to Innofactor, no one wants to buy labor from you So I invested in Innofactor when it was still on a good track, and it ended up being a loss. Someone smarter explain this to me..
Innofactor’s expansion plans didn’t quite go as smoothly as intended, and as a result, resources had to be allocated to solving internal problems. So, there’s significant potential once these internal issues are resolved.
Also, just because there’s a lot of demand in the field doesn’t make it a good money-making machine. Especially the companies listed above are based on providing non-scalable services, and there’s a shortage of employees in the field, which means a significant increase in cost levels in the form of salaries. What happens then when demand slightly decreases, and you’re stuck with highly-paid coders?
What matters is what companies pay, and one shouldn’t chase any trend. A terrible company in a terrible industry can be a top investment if the price is right. Price decides, nothing else.
The problem with looking at the price is that it’s really speculative. Innofactor was cheap in price, but when problems materialized, the price dropped and it wasn’t cheap anymore. That’s why I recommend looking at the culture and references of IT companies and investing accordingly. A good culture and technological expertise attract other coders and give the company a better growth driver for the future. For example, Gofore shines precisely with a good culture, and SiiliSolutions, on the other hand, shines with a technological angle; they have a lot of expertise related to cars. Such “sexy” references attract good coders.
If I absolutely had to invest money in something right now, I’d also put it into Gofore. Their presentation at Inderes’ company evening was so good about how they motivate their employees; they have a great company culture.
I agree that investors should have at least some exposure to this sector. These companies build digital society, and since it’s a service business, investors don’t have to bear as much technology risk or take a view on winning technologies. The downside, of course, is weaker scalability.
We have bought Digia for our model portfolio, and it’s also in my own portfolio to some extent. Digia is clearly one of the most affordable companies in the sector by almost all metrics. The company has been an underperformer, but now we are starting to see signs of a turnaround. The valuation should correct upwards if the turnaround continues.
Gofore is an incredibly interesting and high-quality company (growth rate, profitability), but the stock is on the pricier side (2x revenue for a service company is a lot…). From what I’ve followed in the industry and constantly cross-referenced with different players, I’ve never heard anyone say anything bad about Gofore. From the developer side, I’ve also never heard anything negative about the company. It’s definitely on my buying list as soon as the price is right for me
Mikael, do you have any employer brand statistics for these IT companies? Who attracts the most employees? In my opinion, that’s what will determine who wins this game in the long run.
Haha, I found a Suomi24 discussion about Gofore with some pretty funny comments. There’s a little counterweight to Mikael’s positive comments Gofore työpaikkana? - - Suomi24 Keskustelut
I’d also like to add one company from this sector to my portfolio, but I find it really difficult to grasp the nature of these companies’ businesses. For example, the cyclicality of the industry is pretty much a complete mystery to me, even though there is, of course, an inevitable development towards the digitalization of society, which surely supports the sector’s long-term outlook.
If I were to take a shot, I’d pick either Digia or Vincit. But with my current understanding, I probably won’t be making any purchases, because it’s a really unpleasant thought to own a company whose business you don’t properly understand.
Unfortunately, there isn’t any proper statistics available. “Great Place to Work” competitions/benchmarks and similar give a small indication. I ran into one guy on LinkedIn who had created an algorithm to track employee flows between different companies You can get a feel for it by asking people in the industry (coders & managers), but it’s not worth drawing too big conclusions from an individual’s views.
An unusual move to leave a minority ownership in VALA (Vala Group Oy) and let the company operate independently under its own brand. Siili’s (Siili Solutions Oyj) founder took over as CEO at the beginning of the year, and the organizational model is now being reformed quite aggressively. It will be very interesting to see how it succeeds. Siili has been in my portfolio for years.
Those Great Place to Work awards are truly ridiculous, so they shouldn’t be considered very meaningful. Especially the under 500 people category is like, after a company’s sauna night, the CEO, a little tipsy, throws a “do you like working here” review form for everyone to fill out, everyone puts yes, and they take the award home..
Great podcast episode! InderesPod has truly become the best podcast in the economics category. I don’t understand why people rave about Rahapodi (Money Podcast). Rahapodi is pure entertainment nowadays, with no real substance, unlike InderesPodi.
So I invested in Innofactor when it was still on a good track, and it ended up being a loss. Someone smarter explain this to me..
You can get a feel for it by asking people in the industry (coders & managers), but it’s not worth drawing too big conclusions from an individual’s views.
