Mr Zhitiyanov, Telelink recently split its business into four separate companies, one of which is Telelink Business Services. What called for this change, what are the advantages of such a model?
We had become a pretty big company, nearly 500 people. Before, too, they worked in three different business segments, practically as separate companies, but the business management process was very cumbersome. We actually applied the method of Richard Branson, who says that as soon as your middle management is ready to work on its own, you have to separate it, let it start with a clean slate, give it the opportunity to show what it can do and develop without restraints.
You are the largest system integrator on the market, with a share of some 18% for last year, if I’m not mistaken. What are your targets for this and the next few years?
The size of our market share is somewhat conventional, because everybody has his own idea of “system integration”. But yes, in the last 5-6 years we have definitely been the largest Bulgarian system integrator.
What do we target? Frankly, we are quite ambitious. We currently have several initiatives in the pipeline. One concerns information security. We stake a lot on this, in several aspects. The adoption of the EU General Data Protection Regulation (GDPR) catalyzed this process. We set up a new department that handles only risk management in this field. The idea is that more and more businesses will be affected by such standards and regulations. So we thought that it was important for us to have such a department of consultants standing between business persons, technology experts, lawyers and so on, and balancing between all these stakeholders.
This enables us to provide a very wide range of services related to GDPR, ISO 27001, ISO 20000. In future this will expand, and this trend is not limited to the European Union.
To what extent has GDPR generated a new business for you?
To a large extent. This department is currently overworked, and we are planning to double its staff within a few months. In addition, GDPR generates a large value added and extra sales in various other segments. And we think this is just the beginning. The truth is that most companies now do not understand exactly what GDPR is all about. There are some players on the market who are trying to scare people. We think that many companies are just waiting to see what will happen after May 26. Actually, a new NIS Directive of the European Union Agency for Network and Information Security (ENISA) is also coming up for implementation. Unlike the GDPR, it is not binding, but it still implies that any digital service provider and any critical infrastructure – such as the Kozloduy Nuclear Power Plant, for example – will have to comply with certain rules in the use of network information security.
Information security solutions are usually extremely expensive. Our philosophy is to offer them as a service, as a kind of subscription, without requiring an initial investment from our clients.
Our next priority right now is something we call Advanced Security Operations Center. Through it we offer clients, also as a subscription service, to monitor their infrastructure in terms of information security and to assess the risks. Companies can also benefit from our crisis response team – only when they need it. We also provide Managed Services – when clients do not want to manage their own infrastructure, we can do it for them. This gives them a clear idea of the risks, and they can make an informed decision where they need to invest. Our schemes are very flexible: clients can opt out at any time during the first three months.
We are also busy working outside Bulgaria, focusing mostly on the Adriatic and Romania, mainly in the area of information security.
What is the proportion between your Bulgarian and international business?
For Telelink as a group, 55% of our revenue comes from outside Bulgaria, according to last year’s figures. Otherwise, foreign clients account for about 2-3% of our business here, but this share is trending upwards.
What sectors do your main clients belong to?
We divide our clients into three groups: Enterprise, Government, and Telecom. In 2015 enterprises dominated, and the share of the public sector approximated 32%. In 2017 the share of the public sector reached 56%.
A break-down by segment for the last four years looks like this: energy about 5%, high-tech companies 8%, finance 23%, public sector 27%, telecoms 37%.
Data security is a hot topic today, brought up by the Cambridge Analytica and Facebook scandals. Do you think that society now has a more realistic idea of the importance of the problem? And can such cases also erode the trust of individuals and companies in things like cloud technologies?
I would keep the two things separate. Let’s start with the well-known adage that if you’re offered a product or service free, the product usually turns out to be you yourself.
That’s the case with the most popular technological giants… Their business model is to pool certain data and then resell them. True, in the past two years those companies have been busy working on personal data protection: a kind of ‘yes, we do hold a lot of information about you, but we’ll not use the personal part of it, and we’ll enable every user to delete it if he wants to’. That is to say, this is a matter of personal choice. When you use something for free, you should consider very carefully what you give in return.
As for cloud technologies, I think they will become more and more useful. Until a few years ago, cloud technology was mistrusted in Bulgaria, too. It’s just the opposite right now.
Let me give you an example: I’m using Windows anyway, and it’s updated every Thursday anyway. If they want something from me, they will take it anyway, one way or another. So why not put it in the cloud and take advantage of their service model?
This is very important for our industry: that the model is changing. Before, when a large, expensive product was sold to a given company, as from the moment of the sale the risk – whether they would use it, whether it would work for them – passed entirely to the buyer. The service model changes this completely. Here a larger share of the responsibility stays with the seller. If the customer is not satisfied or if the product proves useless, he can simply give it up.
One of the main pitfalls of digitization, at least in the past, was the fact that people are far less inclined to pay for online than for off-line services. Has this changed? Is the common notion that everything’s free on the Internet coming to an end?
It is changing. In Bulgaria, in particular, we work with any type of companies that are aware that they need information technology to get ahead in business. There are still people willing to spend a lot on, let’s say, coffee and tea in the office, yet at the same time force their employees to use 10-year-old computers. With the change of generations, however, there is a growing acceptance of technologies.
We have recently been talking to real estate developers, especially in the upmarket segment, who say that more of their customers are interested in smart home solutions. Is this sector of interest to you?
We usually operate Business-to-Business or Business-to-Government. Respectively, when it comes to smart homes and end users, we are not all that interested. We are open to provide a model if approached by an intermediary, be it a telecom or retail chain.
Otherwise, we have ample experience in all sorts of “smart things”. As for Smart Cities, that’s something totally different. There we work directly with municipalities and find it much more interesting. For example, we have a lot of experience in anything related to transport.
Can you give an example of a smart city technology that could easily be implemented in a city like, say, Sofia?
One recent thing is the introduction of an electronic ticketing system, which would greatly facilitate the use of public transport. The concept is fairly straightforward. The competitive bidding took place a few weeks ago and, of course, we were among the bidders.
Let’s not forget that every smart solution starts with the collection of data. An awful lot can now be done in this respect, and that in every Bulgarian city. Partially, it is already done with the traffic control systems, for example. The same benefits can be derived from monitoring air pollution, the water supply and sewerage sector, heating utilities – in short, wherever numerous sensors are involved, capable of providing a lot of data and enabling an informed decision about what technologies are needed.
There are many cases in which a smart technology is liked simply because it looks cool, but when it is implemented it does not work because it does not match the conditions and needs.
The advance of technologies such as smart homes or autonomous cars seems inevitable. But does not this world, in which all our possessions are interfaced and monitored, spell the end of privacy? A year ago we talked to the famous architect Rem Koolhaas who said: this is a very alarming trend, I am amazed that humanity has embraced these entirely commercial arguments at the cost of its personal freedom. Are such concerns justified?
They certainly are. The Cambridge Analytica example is a case in point. But I do not think these fears should slow the progress of society. Regulations and control should simply keep pace with technology. As a technocrat, I believe that this is the future, and that the European Commission and the other regulators must find a way to control it. I think this is already happening. I recently saw an analysis according to which governments already spend five times more time in establishing regulations than they did some twenty years ago.
At the same time, connectivity and monitoring bring a lot of security. You always know where your child is. Crime is going down. Yes, a line needs to be drawn – and that’s precisely where personal data protection comes in.
Much is being said about the flaws in education and the labour market in Bulgaria, about companies being hard put to find skilled labour. How do you cope with this?
This is the biggest challenge at the moment – finding people.
Especially when it comes to management personnel. An engineer can be groomed from scratch in three-four years. He can come straight out of school, not even university. It’s not like that with managers. Sometimes they need dozens of years to gain the necessary experience.
At Telelink, we train most people ourselves. We barely rely on ready-to-work staff, either from university or other companies. That’s why we work with several schools in Sofia, organise our own internships, hire external lecturers. About two-thirds of the trainings are based on our own curriculum and one third is work experience – they join projects, get familiar with clients and equipment, so that they can see that interesting things are done in Bulgaria. So, on the whole, we cope on our own. But it’s difficult.
Many analysts believe that with automation and the boom of artificial intelligence, an upheaval is looming on the labour market and that many of the most widespread professions today, such as drivers, cashiers, etc., may disappear within a decade. What do you think?
I think that’s inevitable. It has happened before, on more than one occasion. It will happen again in future.
Our business, too, is changing: 15 years ago we did certain things, now we are trying to do something radically different.
As business fills these niches, other niches will open up, so that adaptable people – and man is adaptable by nature – will cope.
I don’t know whether it will happen within 10, 30 or more years. But we’re certainly headed that way. That’s part of progress.
Is data storage and processing an interesting business for you?
It is definitely interesting. We know a lot about networks, servers, storage, infrastructure in general. And things like artificial intelligence will rely on ever more data for their development. That’s why we are now investing heavily to specialize in this area.
Does Bulgaria offer any specific advantages for data storage and processing? In terms of electricity prices, for example?
In that aspect – yes. In fact, what makes a country attractive is the cost of energy, land, labour. In Bulgaria they are all relatively cheap, and there are companies that invest heavily in this area.
But in order to upgrade to the next level – pooling the data and doing data science, which we prioritize, too – you already need sufficiently flexible regulations to make all this possible. I recently met an American of Chinese origin who had moved to China because there he was given free access to medical data in order to develop his start-up for early image-based cancer detection. As far as regulations are concerned, much remains to be done. But, in general, I believe Bulgaria has the potential to be an innovative country. We already enjoy a sufficiently high living standard which is a prerequisite for this. Our business grows by an average of 20-25% a year, which means that the whole sector is growing. Not so long ago we had five clients altogether. Now we have between 280 and 300. Ever more people are interested in cutting-edge solutions, they try to optimise their business, even hire digital transformation consultants… I am definitely optimistic that very good things can happen in Bulgaria.
Interview for Bulgaria on Air Inflight Magazine with Konstantin Tomov. Photos: Ivaylo Petrov.