THE founders of Kinetic IT had little time to learn the ropes when they entered the information technology market almost 15 years ago, immediately facing off against industry heavyweights CSC, IBM and Hewlett Packard.
But the challenge hasn’t fazed the ambitious company, which in recent months has shown it’s more than capable of taking on the multinationals by winning a number of major contracts.
Kinetic IT chief executive Terry North told WA Business News the company he founded with his brother in 1995 could even be considered somewhat of a thorn in the side of the big end of the business.
“Most of the contracts we’re winning we’re taking off big multinational players,” Mr North said.
“We are probably a little bit of an annoyance to those large companies operating in Australia - not just in Western Australia, but across all states.”
Most recently, Kinetic was awarded a contract to look after Water Corporation’s front and back-end infrastructure for the next five years - a service previously provided by CSC.
The win is an impressive feat for Kinetic given CSC is a global powerhouse and the largest IT and communications company operating in WA (ranked by staff numbers), according to the WA Business News 2013 Book of Lists.
CSC reports it has 850 staff based in WA - a figure Kinetic IT is rapidly closing in on. Kinetic now employs close to 700 staff in WA (making it the second largest in the state) and about 1,000 Australia-wide.
“By the time we’ve transitioned at Water Corp we’ll be well in excess of 1,000 (nationally) ... closer to 1,100 or 1,200 I’d say,” Mr North said.
Kinetic has also won contracts to service one of the largest resources companies in the state, as well as St John Ambulance Australia, WA Department of Health, Carlton United Breweries, and INPEX.
Such successes have prompted Mr North to predict 35-40 per cent growth in the company’s staff numbers in the current financial year - an increase in line with recent years.
Turnover is expected to exceed $100 million over 2012-13, which would be growth in the 25-30 per cent range. Turnover increased 10 per cent to the year ending June 30 2012, compared to the previous 12 months.
With revenue from the pipeline of recent contract wins potentially coming in towards the end of the year or even 2014, Mr North said it was reasonable to expect Kinetic to continue growing both turnover and its employee base.
“We’ve limited our growth to not be more than (35-40 per cent staff growth); if you grow too big too quickly things start going wrong,” he said.
“But we have new people joining every week.”
Mr North said clients had started to shift away from outsourcing IT contracts to cheaper offshore suppliers.
“A lot of organisations moved with the trend to offshore and all the major suppliers set up operations in other countries that allowed for lower wages and efficiencies,” he said.
“We assessed that and had to come up with better ways of working and automation to be able to compete in that market.
“Now there is a big shift away from that popular approach to offshore by realising there is much greater value in having localised, dedicated people.”
State government tenders show Australian companies have taken their fair share of $75 million worth of contracts signed in the past three months.
The largest was the $57 million contract for work on the Fiona Stanley Hospital, in which WA companies BMC Software and Data#3 were successful, alongside NSW company Commsforce.
Another company from NSW, Dimension Data, has won a $2.1 million contract with the Public Transport Authority for data storage and associated services.
Locals failed to secure the $2.6 million contract for IT infrastructure and servicing on the Pathwest and Cancer Centre development at the Queen Elizabeth II Medical Centre redevelopment, however, which went to multinational Fujitsu.
Fujitsu sits below Kinetic IT as the third largest IT and communications company in WA, followed by Empired, Ajilon, and ASG.
Mr North said while those companies were often considered competitors for Kinetic, his business had a point of difference in that it only provided services dedicated to infrastructure, while companies such as ASG Group also provided application and software servicing.
ASG Group has been through a rough patch of late, with Patersons Securities predicting a 12 per cent decrease in its half-year earnings to $11.5 million on revenue of $78.4 million.
For Kinetic, Mr North said the next step was international expansion, which had already begun with the company beginning work with its first multi-national client, INPEX.
“In the Australian market we’re running out of business because you’re never going to get 100 per cent market share, Mr North said.
“We’ve already commenced our delivery to organisations outside of Australia; INPEX will take about 40 staff initially and they have huge growth plans.”
