'ICT will save Greece': How small tech firms are holding on despite the crisis

Despite tough times, tech companies are managing to keep their spirits up. Paying closer attention to the ICT sector could help reboot the debt-stricken Greek economy, they say.
Written by Andrada Fiscutean, Contributor on

Small and midsized technology businesses in Greece are among the hardest hit by the economic turmoil still gripping the country: some have been unable to pay their staff and have experienced a brain drain as workers move abroad to find work, while others have lost their trust from international clients. Adding to all this, banking restrictions have been affecting their ability to do business.

"Inability to pay technology providers abroad due to restrictions in cross-border transactions, freezing of investment discussions due to market risk, and lack of any cash-flow or working capital support from the banks" are among the consequences of the banking shutdown facing businesses, said Haris Makryniotis, managing director at Endeavor Greece, an international non-profit organization supporting local entrepreneurs.

In the recent years, some of the most successful SMBs have moved their management abroad, while keeping the developers in the country, and the past weeks have been easier for them than those businesses which run all operations in Greece.

Nubis, a cloud platform for managing data, is located in Greece and has clients in six different countries. "The main problem was the postponing of many major projects," CEO Dimitris Kontinos told ZDNet.

"There was also an issue regarding payments of foreign suppliers-vendors, for example, datacenters and third party software, since the capital-controls prohibited payments abroad through credit cards. In most cases we were also well prepared having enough credits on cloud infrastructure."

John Doxaras, CEO at Warply, a mobile loyalty agency active in southeast Europe, said his company was lucky to have a web banking account, therefore payroll was not affected. "The issues we had were due to the bank holiday," he told ZDNet.

Another Greek business, localization platform Transifex, with employees both in Athens and in the US, felt the crisis at the individual level. "Our single most important asset is our people, our team. And they are affected, both operationally and emotionally, which, in turn, affects us as a company," CEO Dimitris Glezos told ZDNet. "The impact is severe, and we're doing our best to avoid any operational impact on our company."

Testbed for currency experiments

The threat of the Greek exit from the euro, the brain drain, and lack of investors are three of the things SMBs worry the most. "The worst case scenario for ICT in Greece would be a Grexit", Dimitris Kontinos told ZDNet.

It would have devastating consequences for both his company and the tech sector in the country, he said. "International datacenters as well as other resources such as software would be extremely expensive. We would have limited-to-no investment interest from VCs and the ICT companies would not be able to invest in R&D in order to present greater value to their customers," Kontinos said. "The future of Greece rests without a doubt inside the European Union."

Transifex's Glezos agrees. His fears include: "an exit from the euro, an increase in red-tape to work with banks, and internet connectivity interruptions".

"The best course of action for Greece is to protect small, innovative, exporting businesses. Startups should be religiously protected and guarded against any distraction. We're competing on a global scale, and even a small upset does have an impact to the business," he added.

Warply's Doxaras is mostly concerned by a "massive brain drain that will escalate by the end of 2015". Some of his fellow entrepreneurs have lost employees, with ICT professionals the first to leave the country, he said.

The government should focus more on this industry, he added: "ICT will save Greece. The country at the moment is super interesting, having quadrupled electronic payments, in fact enforced due to the current circumstances."

In the middle of every difficulty lies a chance of progress, and Greece is no exception. "There is a massive opportunity in mobile payments, mobile wallets and fintech in general," Doxaras told ZDNet. "Greece is at the moment the largest testbed for currency experiments in human history."

Local developers and businessmen have what it takes to help the country through these challenging times, Kontinos continued. "We have great assets - professionals, currently located in Greece and the burn-rate of a development hub in Greece is about three to four times smaller compared to other major EU countries such as Germany or the UK, whereas the level of services remains extremely high."

Both Kontinos and Doxaras plan to keep their tech teams in Greece, not to move them abroad. For Glezos, the issue is uncertain. When asked whether he plans to relocate or not, he answered: "It depends." Currently, he wants to further invest in the development and design team in Greece. "If the situation gets worse, our company will adapt."

"Choosing to establish a legal entity abroad or moving the legal seat of the company abroad has definitely been a powerful trend since the beginning of the crisis, and it has definitely accelerated in the last months; even more so in the last weeks," Makryniotis of Endeavor said.

"Most firms, even if they relocate the legal entity or the sales or business development-related activities, they choose to keep their R&D and technical team in Athens, as they can find highly skilled and highly competitive human capital."

It's easier for tech giants

Established companies such as Vodafone are better at coping with the economical turmoil. "At the local level, our Greek business is clearly affected by the economic situation -- as are all businesses -- however we have comprehensive contingency plans in place and are fully confident we will be able to maintain full continuity of service to our customers," Matt Peacock, group director of corporate affairs, told ZDNet.

His company took "measures to support employees and contractors through challenging times," he said, though he declined to detail them for "security reasons".

Peacock told ZDNet that the company doesn't plan to close the Greek office and has not put staff on forced leave. "We have invested in Greece for the last 20 years and intend to remain in Greece for at least the next 20 years," he said.

Other sectors of the Greek economy are struggling even harder than ICT. Retailers, for instance, pay their employees in cash in order to help them, but also fear bank deposits haircuts.

"We see two trends: horizontal salary cuts of up to 30 to 40 percent to cope with current liquidity crunch and forced leave, typically unpaid," Emdeavor's Makryniotis said. "We expect massive layoffs over the next three to four months, if the situation is not dramatically improved."

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