I love stories like this because it tends to result in a "Who??" from all over the place and reminds us that, yes, you too can be a multi-billion dollar company with very modest mindshare in the broader industry.
That’s pretty common. There are a lot of super successful companies that do good business without any mention in the media.
I think a lot of SV companies are very dependent on media coverage to get their valuation up. Especially since they don’t have an idea how to make profits.
The Silicon Valley rockstars you are talking about are usually customer facing, therefore media coverage is of interest for a broader mass. GlobalLogic provides services to companies, which makes them less commonly known. Meanwhile Hitachi is known in a certain niche at best...
The only reason I know that company name is because I think they sold hard drives in the past, and/or showed up on my BIOS screen. So maybe IT people know it too.
No - I'm afraid you are mistaken: what Hitachi sold was a "massager" - they were "distraught" to discover it's salacious "alternative" uses as it harmed their brand. Hitachi only agreed to continue selling the product as a joint venture (IIRC) if they removed the Hitachi name from it. So it's rebranded as just the "Original Magic Wand" now - no Hitachi :)
Quick tip: You can find a lot of places selling really solid new power tools at 50-75% off because of the name change. They will usually be sold now as "HPT", Hitachi Power Tools and they have to move the stock before they can sell the newly rebranded tools thus the discount.
Hitachi is well known because, like many Japanese and Korean companies, they make everything. In my neck of the woods they're a household name in machinery.
It's outsourcing company there is a decent number of them.
Many from small Eastern European countries like EPAM Systems from Belarus (Stock: EPAM) Mkt Cap 22.55B. They tend to have HQs in US fo obvious reasons though. Surprised there is not much invest in this space as you can grow one pretty rapidly to a fairly large size.
> Surprised there is not much invest in this space
There is - huge spike in demand for talent locally in the last 5-10 years as this business model started becoming popular. Also seeing smaller agencies being acquired by larger ones in some decently sized acquisitions recently.
Initially the local IT sector was undeveloped, there were quite a few good engineers working in really poor condition, the only decent option was relocating to Western Europe.
So there were experienced developers available for cheap, and, compared to India, Central/Eastern Europe is closer to US (some overlap in work hours), usually a much nicer destination to travel to for offshore offices (depending on the country, Croatia for example is a really nice tourist destination, good English level and the culture should be more familiar).
So initially that higher quality talent got absorbed at below market rates (especially for US standards) and there were quite a few success stories and reputation builders. But now as this model expands competition is driving up the price locally as well - there just isn't enough people to outsource - they are starting to scrape bottom of the barrel talent, asses-in-seats, straight out of college Indian code farm model with all the problems that had. Also portals like toptal made it easier to skip these agencies and work directly for clients so now the agencies have to compete with that for talent.
I think the peak for this agency model is behind us and I think the quality has started to drop (there were a few smaller agencies that built their reputation like I described above and had great success, they used availability of local talent to built respectable teams and getting hired there was a resume highlight, sort of like getting hired at FAANG on a local level. Nowadays they are hiring people they would screen out after an initial call and it's selling asses in seats, cashing in on built reputation)
My last full-time job in a corporation involved managing many EPAM developers and after working with offshore developers on multiple continents I can tell you they were the strongest technically that I had encountered. I had never heard of EPAM until my boss told me we were bringing them on board to help us scale our app dev efforts! We had IT consultants from a Big 4 firm who felt more like the model of hire undergrads and teach them a few technical things to throw jargon around in front of the client. I realize in both cases it can be luck of the draw but I feel like firms such as EPAM are focused on bringing serious technical skills and experience to the table rather than a general consultant demeanor.
Big shops will be sending their cheapest (aka youngest) consultants to all their small clients, or at least until they complain enough about the quality of work that they send someone more senior along to right things. That's what allows other smaller consultancy shops to compete, because such clients would be considered our "big" clients that we send our best people to. You're just waiting for that moment where they get fed up with a big shop and open it up for a new contract, and you can swoop in and pick up a new client.
The Big 4 consultancies hire college grads give them basic training on the big cloud platforms and then fill up projects. Otherwise they hire cheap engineers from Eastern Europe or India.
They are not looking for experienced engineers. At least in the Technology Advisory space.
That's how these offshoring consulting companies make money: for every 7 fresh undergrads, there is one senior person. They pay $3500 per annum for these cheaper resources; the senior resource gets paid about $16000 per annum. Profits for these consulting companies come from these $300 per month resources.
I can speak for their Ukrainian offices starting pay is around 1.2K/month USD and it quickly goes up mid level (3+ years) would be 2.5K+ and senior 4k-6.5K/month. Tech leads architects can make over 8K. Keep in mind that given a tax regime in place of like 5% and cost of living being low you are in very solid shape.
Thousands of undergrads are happy to even get that job in India. That's what TCS/Infosys/Wipro pay for fresh graduates; that's why they milk from the billable hours model.
There are countries in Africa that pay more than that for unskilled manual labor. Even the cheapest software developer should be able to get $1k before tax per month. Of course I am assuming that these people actually became software developers, if those 7 juniors are merely trainees who haven't written a single line of code in their life then that salary may be justified.
>The Big 4 consultancies hire college grads give them basic training on the big cloud platforms and then fill up projects.
that's correct. i went thur that with Avanade. they teach us some basic about the security system that they implemented for their client and client ask for tech support and guess who they send.
Wow, impressive. Probably not much interest because they trade at a low multiple, but that's quite the company. In my experience the quality of the experience you get when working with a software consultancy/dev shop is inversely correlated to the size of the firm. But I guess it works for others.
I work with them on a regular basis.
You are correct, talented folks. But they get the short end of the stick when it come to who does what.
Moral is not super high.
I've seen the same pattern as well. Growing dev teams quickly without quality drops is difficult. At some point, if you're successful enough in that space, your need to bring in more bodies outpaces your ability to ensure you've got good staff and processes.
If you don't have qualified staff then that should be part of your business model and you should be honest about it to your customers. Of course what happens is that managers ride on the reputation for some short term money.
There is a good bunch of companies that got to Billion plus land much quicker than a decade. It is very feasible to do it in 5. You have to realize that most of them were bootstrapped
and to grow you need enough resources to have a decent sales office/HQ in US which is out of reach for a long time unless you start with a very solid financial backing.
This distinction (and naming) is really not strict today, especially when total corp headcount exceeds a few thousands. One project may be pure software consultancy, another may be a a complex solution, yet another can be a hardware project inside the big corp (so if it was a separate entity it would be called a product company or startup). People can be outsourced or outstaffed or anything in between.
Basically in a case of 10k outsourcing corp it is pointless to think about it as a single entity, it's a collection of projects each managed differently, with different expertise and different share of in-house development, from original products to dumb legacy support.
> you too can be a multi-billion dollar company with very modest mindshare
That's in terms of valuation, not revenue. GlobalLogic has barely hit $1 billion in annual revenue. Its FY 2019 revenue was $771 million, according to [1]. It's projecting $1.2 billion for 2021.
It has somewhere around 17,000 - 19,000 employees, which works out to somewhere between $40k to 60k revenue per employee per year. And that's not even profit. (As a completely unfair point of comparison, Google's revenue per employee is upwards of $1m.)
So a $10bn valuation is just ~18,000 people, times ~$55k revenue per person, times a 10x "times-revenue" multiplier for the valuation.
I think a lot of the surprise at unexpected multi-billion valuations comes from the perspective of how big $1bn seems to an average individual. But it's not that big once you do the math for companies with 10,000+ people.
Hitachi Data Systems has been in IT since 1989, and their history in the market goes back in to 60's or 70's. Now rebranded Hitachi Vantara, most of their revenue was competition was in the same space as EMC (now owned by Dell) for enterprise data storage. They are a wholly owned subsidiary of Hitachi, which you can think of like GE or something, they are in everything. The market for enterprise software and hardware is massive and often completely under the radar for an audience like HN.
Do you have some knowledge to share about s3 being built on a commercial storage platform? I was informed it was commodity and custom parts in pcs with cheap spinning rust and a lot of redundancy.
I would honestly love to read a write up from somebody closer to the source, what the hell do all these companies do?
I’ve been in tech and tech-adjacent companies for over a decade. And not once have I or anyone around me ever thought “we really need some IBM/Hitachi/Avanade products now”.
What value proposition do firms like this actually fill? I’m genuinely curious.
The short answer is that they deliver solutions and support. What they sell, primarily, is the ability for someone at your company to call them and say "we have problem X" and they will respond "no problem, we can solve problem X for you", and they will take care of the rest. This usually costs millions of dollars.
Let's say you are a large Fortune 500 company. A bank perhaps, a large retailer or an oil company. Your net worth rivals Amazon. You do not use AWS or GCP, you host your own data centers, and you have for decades. Now let's say you need another few petabytes of storage with global replication, durability, availability, you need hardware delivered, fibre cables routed, software to tie it all together and someone to call when you run into problems or someone on your backend application team can't figure it out. Or maybe you need Oracle and SAP integrated with Active Directory for your 100,000 employees.
Well, these companies will make that happen. Or many other problems you might have, such as building custom applications, implementing tooling, designing systems, whatever. It's kind of like asking "who employs all these personal chefs?! I've been eating for years and I've never needed a personal chef. I just go to the store, buy some groceries, and make food from the recipes I find online!" The thing is that some people just don't want to deal with all that, and they have enough money to make it someone else's problem who has done it before.
I spent five years in this space (in a small consultancy that was acquired by GlobalLogic last year). I think this is how one of our salespeople might describe the process.
The reality tends to be somewhat messier. I especially disagree with the "personal chef" analogy. A personal chef is an expensive, dedicated, long-term employee - much closer to a full time SWE than to a consultancy. It's more like hiring a catering company for a wedding.
You're right, that would have been better. I certainly didn't mean to imply this process always goes smoothly, or that the quality of the work they provide is without question.
When I started down the Fortune 500 consultancy path, the quality (or lack thereof) used to bother me a lot, then I realised that most customers don't really care, what they want is something that makes their core business run, doesn't matter how.
As long as their core business and KPIs remain untouched, and no scalations take place, everything is fine.
Tech or tech-adjacent firms tend to be defined that way, at least in part, because they do the things these major software consultancies and outsourcing firms do on their own.
If you're not a tech or tech-adjacent firm, and have a nontrivial technology need, you're likely to pick up the phone and call someone who specializes in delivering those solutions.
Think of it like the difference between Instacart having their own software teams and infrastructure to manage shoppers and orders, vs the national grocery chain Instacart operates within calling IBM for an integrated inventory management and point-of-sale system.
There are debates to be had about whether this approach yields good results over the long term (specifically for the inventory management example, you could point to Amazon and to a lesser extent Walmart having such success in part because of their internal software efforts). But if you aren't prepared to reinvent your grocery stores as a friendly frontend for your logistics technology, plenty of firms have solutions to sell you.
Some nice responses to this, but I'd be interested in hearing about the trade off between a big company spinning its own IT department vs hiring an IBM et al.
Attached to articles about ERP and government contracts failing and going over budget I often see comments like, this isn't rocket science I could code something for them. Obviously not the right fit for everybody, but is it right for some?
Large companies often have business people that drive tech initiatives. Once they come into a position where they need to propose goals, they will either need to lean on existing technical leaders in the org or reach out to firms that can technically scope their aspirations. Sometimes they might have just one year to prove their direction, so they aren’t going to wait around to develop in-house or hire for months and months trying to find a culture fit. They are going to staff in a hurry and get rolling yesterday.
Stay close to agencies that have leads at organizations like this because that’s a great way to get hired at a place you’d never expect to be working for (some random Fortune 500 company), and these hiring sprees don’t show up on LinkedIn or job boards. They go straight to the consultancies or agencies (you know, those pesky recruiters you never cared for).
Most of these companies implement COTS software . So if you want to implement Oracle, SAP, Salesforce, Service Now , JIRA or other such enterprise software , you will invite bids from these consulting companies for implementation, support and SLA .
> is IT outsource/consulting pie so large to feed all these companies?
Oh darn well it is (I worked at one of those consulting companies long time ago). Many people don't realize how much of the software is written by those companies. I personally worked onsite and offsite for two FAANG companies, one health insurance, and one telecom company. I myself was amazed how often projects were pretty critical to their operations, while I was technically not their employee. In case of FAANG companies we signed a paper agreeing we will not publicly say we did anything for them.
I know friends who work the same way for major US banks, credit agencies, energy and retail companies. I have hard time imagining a big company that doesn't buy IT outsourcing (probably government agencies, like military, space, but I'm not sure about their suppliers).
As a rule of thumb Asian giants tend to deal in everything. Especially true for Japanese giants (which is weird, since for Japanese companies it's also common to find small giants that deal in one thing only and never integrate). Especially especially true for Korean giants.
This is called a zaibatsu in Japan and a chaebol in South Korea. The Korean ones in particular are simultaneously fascinating and disturbing due to their interwovenness with the state.
>This is called a zaibatsu in Japan and a chaebol in South Korea. The Korean ones in particular are simultaneously fascinating and disturbing due to their interwovenness with the state.
The zaibatsu were similarly interwoven with the Japanese state through WW2, when the connections were cut during the US occupation. While Sony, Toyota, Mitsubishi, et al. are very large companies and have the corresponding influence any such large company would have in any developed country, there is no comparison with the dominance of Samsung, Hyundai, and LG of the Korean economy and politics.
is there no comparison though?
atleast until the last late 20th century, many european countries had companies which where basically state sponsored enterprises in certain regards. (Phillips, Volkswagen, Airbus etc).
No comparison. Take Mitsubishi. I'm not sure what most people think of when they think of Mitsubishi (probably econobox cars?). However, if you look at the entire scope of the Mitsubishi Group, you get a different idea...
Mitsubishi UFJ is Japan's largest bank and the world's second largest bank holding company with ~$2tn of deposits.
Mitsubishi Corp is Japan's largest general trading company, and includes active business lines covering business services, consultancy, infrastructure (airports, railways), asset management and finance, energy trading, primary extraction of metals and minerals, heavy machinery, defense contracts, ships, chemical manufacturing and trading, as well as retail.
Mitsubishi Heavy Industries separately manufacturers airplanes, air-to-air missiles, helicopters, aerospace turbine engines, main battle tanks, nuclear power plants, gas turbines generators, LNG carrying ships, cruise liners, space craft, wind turbines and desalination equipment.
MHI's subsidiaries also include Mitsubishi Chemical (which is Japan's largest chemicals company), Nikon Corporation (cameras, optics etc), and Mitsubishi Motors.
I thought I'd read something about them ceasing production due to the odd brand association, but upon further research it appears that they're still making it, but without Hitachi markings, and distributing through a company called Vibratex.
Came to post this. Pun intended. But honestly it's good for both uses can confirm. Though the new Theragun style tools are a step up for sports therapy.
Yamaha also makes routers for SMBs that has top shares in Japan. It's loved because it's very stable and they provide firmware and support info without contract.
It's funny because even as obvious as it is .. it's easy to forget. I mean a lot of people know Yamaha produces motorbikes AND pianos AND hifi devices, yet it doesn't feel like a giant.
memories of my beloved Mitsubishi Diamond Pro 21" CRT
As supporting evidence... about 10 years ago I was staying at a hostel in Seoul, I went to buy a bar of soap at a convenience shop. I realized as I was getting ready to shower that the soap itself was made by LG!
Probably completely banal for Koreans but to me it was equivalent to Tesla manufacturing basketball shoes, completely left field.
In addition, you can also live in Samsung and LG apartments in Korea, while driving Samsung cars insured by Samsung insurance, getting your health care at Samsung hospitals, going to Samsung Everland amusement park, seeing art exhibits at various Samsung art museums, staying at Shilla Hotels when you travel, wear clothes from Samsung's original or partly owned brands such as FUBU and Beanpole... You get the picture.
Hitachi used to make chips, hard drive (HGST = Hitachi Global Storage Technologies, now owned by WD), and still makes optical drives, storage (Hitachi Data Systems, renamed a few years ago to Hitachi Vantara). Defo run into Hitachi products a few times; maybe I'm showing my age though
Hitachi originally made their own design hard drives, I have a 100MB ESDI one, more recently they bought IBM's disk business before selling the lot to WD.
Hitachi made the SuperH ISA, a RISC instruction set that was notable for being a 16 bit fixed ISA. It had extremely high code density, and was great in environments constrained by storage. They sold the technology to ARM. If you're familiar with Thumb, that's Hitachi patents at work.
The Sega 32X, Saturn, and Dreamcast used SuperH CPUs. They even made a few supercomputers with SuperH CPUs, I believe the record for most digits of pi was once held by a Hitachi supercomputer. The linux kernel still support SuperH.
"The OpenStreetMap Membership Working Group released a public report [25] alleging that this was an orchestrated, directed campaign by GlobalLogic to register in mass their Indian subsidiary employees, and suggested an attempt to manipulate the election"
I'm one of the report authors, and was elected to the OpenStreetMap Foundation board one year later.
One candidate thought that the OSMF shouldn't ever choose who gets to be a member. We respectfully agreed to disagree.
The other candidate, despite being shown all the evidence, thought that there was nothing nefarious, and that asking the OSMF board to investigate was a "witch hunt".
The previous OSMF board chairperson and secretary are no longer active in the OpenStreetMap project.
This could just be a product of the specific people I have dealt with but I have had the (dis)pleasure of dealing with quite a few outsourcing companies and GlobalLogic so far has been the only one where I felt the relationship is productive and we are getting good people.
I'm not at all surprised to see this. The writing has been on the wall that Hitachi has an appetite for getting into enterprise software. 5-ish years ago they bought an SAP infrastructure shop that I used to work with when I consulted in the space. At the time it seemed they were dipping their toes but it felt like only a matter of time until they made a bigger push into enterprise software services.
They have actually been in this area for quite a while. My first real dev job was at HDS after they acquired Archivas back in 2007. We built off the Archivas foundation to deliver petabyte-scale object storage for big enterprise/govt, kind of like selling S3 in a box for companies to put in their datacenter. HDS made the hardware and software.
Hitachi is definitely going into the digital services market.
They have been working on a lot of various iterations of VeinID technology and have launched their own cloud hosted finger vein authentication solution last October and are definitely investing into this market.
This from the article confirms by thinking:
> Past GlobalLogic projects include working with McDonald’s on its customer app and in-store digital ordering system and with chipmaker Qualcomm on a fingerprint recognition system, according to its website.
And here are some resources to the VeinID innovation which has been going on at Hitachi:
So it's a San Jose-based TCS-alike. Outsourced software development, including industries like automotive. Yikes. :-/ Remember how 737 MAX MCAS happened? Outsource software development. Outsource developers don't have the same motivations and interests to produce and support good code over the long-haul.
The old proverb usually holds: "If you pay peanuts, you get monkeys."
They are actually pretty normal, but I guess not well known outside of the investment world. These are two of the largest groups making private equity investments.
Partners Group is a very large investment management firm with $109bn assets under management (AUM), of which 48% is in private equity. It is pretty common for pension plans to invest in private equity firms, but the larger ones also make direct investments, usually alongside a large PE firm such as Partners Group.
CPP Investments, the entity that manages all of the assets of the Canada Pension Plan, has US$378bn AUM. ~25% of that, $90bn, is in private equity. Some of their direct investments, which you can see on their website[1], are Blackhawk Networks, Jimmy John's, Neiman Marcus, Petco, Qlik, SUSE, and Waymo. They also have investments in VC firms, such as A16Z, Sequoia Capital, and even Y Combinator.
Would be great to have a census on programming power worldwide. Like the hash rate in bitcoin. Probably going straight up, and though it feels like almost all apps and websites are hacked together without any eye on details and even increasingly limited features
I have worked with both GlobalLogic and InfoSys developers. In my experience, they can't be compared: for me globallogic wins. However,... they are both freaking huge companies, so you never know what you get.
What distinction are you making? I take your comment as pointing at the fact they they are not owners of the software when it’s done, but developing software for others still makes one a software developer, or no?
A lot of the "system integration" work that these big consultancies get hired for is more like configuration (of big erp systems like SAP and Oracle or whatever)? There may be some overlap but as I understand it's very different from what many people would think of when they hear software development.
Edit: I think this causes internal confusion as well, like consultancies hear "software project" and assume their team can do it because they have "software" experience, and then you end up with these disasters like you hear about from Accenture and Deloitte where they spend 10's of millions of dollars building a website that doesn't work. The parallel language in a academic, SV type tech, and tech consulting is actually a source of a lot of confusion.
The thing with these consulting companies is they will never say no (including for stuff that they are wildly unprepared to do). You can hire them for installing software on employees' computers, deploying and managing some SaaS product, building a healthcare signup website for an entire state, building an internal portal, running a tech conference, even planning a company picnic (not kidding). So trying to define what area they operate in and what exact role their employees play is impossible.
