Negocios / A Small IT Giant

A Small IT Giant

Born as a start up, Quarksoft is now a leading company in tailormade software development with guaranteed delivery time. It is also a pioneer in exporting systems to the US.

The last two years were terrible for many companies, with depressed markets, lower income, resizing and scarce resources to reinvest and grow.

But to Quarksoft, a firm specialized in tailor-made software development, economic recession was almost unfelt and 2008 and 2009 were maybe the best two years in the company’s history.

While most companies were in shock, Quarksoft was receiving awards and acknowledgements for its innovative profile, getting new clients, recruiting more staff and making a strategic alliance with Oesía, a Spanish multi-national company in the IT sector. That alliance brought 26 million usd in capital investment to the company.

Quarksoft is now a leading Mexican company in business software development. That enables it to guarantee better delivery times for its clients and lower error margins. It is also the first Mexican Systems developer to get the Level 3 CMMI quality certification and to adopt PSP and TSP process methodologies. These are compulsory requirements to access the US software market.

The company’s exports to the US amounted to 3 million usd between 2008 and 2010. In fact, its alliance with Oesía is aimed at projecting Mexico as a service platform supplier to the US, one able to compete in terms of quality with other specialist countries in this field, like India and Ireland. Quarksoft will be the flagship.

“We have representation offices in Silicon Valley, North Carolina and Madrid,” said César Montes de Oca, founder and director general of the company.

Like many other companies in this sector, Quarksoft started in 2001 as a small business with 11 people on staff, including César Montes de Oca and three other founders. Nine years later, the company employs 280 certified engineers at four offices in Mexico, located in Aguascalientes, Zacatecas, León and Mexico City.

They have a wide business portfolio, including corporate clients like Palacio de Hierro, Grupo Posadas and Grupo Empresarial Ángeles; banks, BBVA Bancomer, Banamex, HSBC and Ixe; insurance companies, GNP and ING, and firms in the stock market (Mexican Stock Market), payment processing (PROSA) and pawn business (Nacional Monte de Piedad).

Quarksoft’s clients also include government institutions, like the Supreme Court of Justice, the ministries of Defense and Public Security and the Social and Heathcare Services Institute for State Employees (ISSSTE), as well as state governments (Guanajuato and Zacatecas).

The company’s turnout in 2009 was around 20 million usd. This year they expect to sell some 22 - 23 million usd.

Processes Pioneer
Quarksoft was formed a decade ago on César Montes de Oca’s initiative. Born in the state of Zacatecas, Montes de Oca is a computer systems engineer graduated from Tec de Monterrey. His brother Carlos and two other engineer friends helped him found the company. Montes de Oca and colleagues identified a series of recurrent problems in the software industry: developers did not understand clients’ requirements and often failed to estimate delivery times and error margin in the product. Activity was disordered and that had an impact on clients, both in terms of implementation schedule and costs exceeding the initial quote.

On the other hand, developers’ working hours were exhausting –between 10 and 12 hours per day. They often had to work during weekends and holidays. They had no quality of life.

Montes de Oca and his partners decided to put things right and devoted themselves to identifying best international practices in software production, and learning them. So Montes de Oca decided to take a Masters from the Software Engineering Institute (SEI) of the Carnegie-Mellon in Pittsburgh, Pennsylvania. He also took an MBA.

The team learned software development process methodologies, both individually and as a team: Personal Software Process (PSP) and Team Software Process (TSP). They became experts and decided to implement them in Mexico by founding Quarksoft in May 2001.

“There was lots of talent and many engineers in Mexico but they lacked a methodology. We were the first to implement processes in this sector,” said Montes de Oca. He also explained that product quality depends on software process quality: “If you can control the process, you can then control the timing,” he added. Thanks to this, Quarksoft is able to guarantee a schedule deviation of +/- 15% and an error margin of 0.36 defects per 1000 code lines (0.36 D/ KLOC). These are the best in the market and means Quarksoft can guarantee project delivery within schedule and generates less than 4% in maintenance costs for the client.

Conversely, most software developers incur in process deviations ranging between 50 and 400% on product delivery, as reported by consultancy firms in this sector, like Gartner.

Quarksoft’s first clients were ING Comercial América and AC Nielsen. With time, Montes de Oca and his partners started harvesting and developing systems to improve clients’ operation processes in different areas such as financial, manufacture, telecommunications, retail, healthcare and government.

In 2005, Quarksoft was one of the 20 Mexican companies that the Ministry of Economy selected to participate in the Technology Business Accelerator program, known as TechBA. TechBA is an initiative of the Ministry of Economy and the Mexico-US Foundation for Science (Fumec). This program supports innovative firms in the IT sector to help them place their technologies, products and services in the global market.

Thanks to TechBA, Quarksoft could be in Silicon Valley, California, for one year, and was supplied with an office, legal advice and networking through a series of events –conferences, internet forums- and contacts to do business. This happened again in 2006, at the Science Park in Madrid, Spain.

Two years later (2008), Quarksoft was awarded the prize to the Most Innovative Firm by American Express and Dell México. And it got the second place at the Dell Small Business Excellence Award in 2009. As part of this acknowledgement, César Montes de Oca visited Dell headquarters in Round Rock, Texas, and had a 90-minute meeting with Michael Dell, the company’s founder Chairman of the Board.

Shortly after that, Quarksoft completed the process to become a “High Impact Entrepreneur,” granted by International Endeavor. It was this organization that provided the support of an Advising Board including senior business people and consultants under a pro bono scheme. “That helped us a lot in defining a steer, structure and vision,” said Montes de Oca.

The big leap came in early 2009 when top managers from Oesía –the second largest Spanish firm in this sector- came to Mexico to look for a local software firm in which to invest.

“They approached us and we liked their proposal. They said: ‘We want you to help us build a home and furnish it’,” Montes de Oca recalls.

In February 2009, Oesía acquired 51% of Quarksoft for 26 million usd and local partners kept 49% and operational control of the company. “We decide how to do things,” says Montes de Oca.

This turned Oesía into an international company by having a sister company in Mexico, and Quarksoft was strengthened.

The Quarksoft-Oesía alliance is now working on a 50-million usd project to digitalize and automate processes involving 10 million government employees registered at ISSSTE. This is the biggest modernization process in the social security system in Mexico.

Foreign clients include G&D, a German firm specializing in currency counting and automation systems, and LiveOps, an American company in the outsourced call centers business.

Oesía and Quarksoft are now targeting the international market and aim to turn their organization into a global platform of technology outsourcing to attract clients in the US and other countries. “Actually, our main target is the US,” said Abel Linares, director general of Oesía, when the alliance was announced.

Quarksoft’s international sells are 15% of its total. Its goal is to increase this level to 60%. The plan is to put international sells in the region of 70 million usd per year in the next four years,” Montes de Oca concluded.

Camino a Santa Teresa No. 1679, Col. Jardines del Pedregal, Del. Álvaro Obregón, C.P. 01900 México D.F., Tel. +52 (55) 5447 7070