LG CNS Gearing Up for Global Action

By Cho Jin-seo

Staff Reporter

LG CNS said on Thursday that it will transform itself into a global player by taking 30 to 40 percent of its revenue from outside of Korea.

The business-to-business computer system consulting and service firm said it will achieve the goal by seeking M&A opportunities, reinforcing overseas operations and hiring foreign brains.

As the first step, it said a foreigner will be arriving on April 13 to head Ucess Partners, its call-center outsourcing subsidiary. The firm didn't reveal his or her name.

``We have good things to sell, but we didn't know how to sell them in other countries,'' Shin said at a press conference celebrating the firm's 21st anniversary. ``So far, the human factor has limited our growth. If somebody had won a contract from South America, I would have been distressed because we wouldn't have been able to perform the project without adequate knowledge about the culture and language.''

LG CNS is one of the two largest IT service companies in Korea, along with its archrival Samsung SDS. The two companies have become giants by taking care of corporate computer networks ― such as finance, HR, sales, procurement and logistics ― of their parent group's subsidiaries.

Such in-house IT service firms have slowly expanded to the government and other public sectors such as airports, subways, expressway toll systems, hospitals and tax systems. In case of LG CNS, about one third of its 2.26 trillion won of revenue came ``comfortably'' from LG Group companies, while the rest were made from more competitive projects outside of the group's boundary, Shin said.

The local market, however, has become almost saturated after a decade of the IT boom, and IT service firms have been turning their eyes outside Korea with different strategies, to re-ignite slowed growth.

Samsung SDS, the largest in the pack, last year signed a strategic partnership contract with European powerhouse Capgemeni. The two agreed to share the same brand in the IT consulting field, and learn from each other's experience.

POSDATA, a sister firm of steel maker POSCO, has seen bolder transformation. Its business has been mostly focused on providing IT hardware, software and maintenance services to POSCO and some other firms and public organizations. However, it began to manufacture wireless Internet equipment and devices such as Mobile WiMax, hoping this could lead to its next-generation growth engine.

LG CNS President Shin said that his firm will take a rather conservative approach. He said the firm will first use its seven foreign branches in India, China, Europe, the United States, Japan and Indonesia to boost cooperation among themselves.

The most exciting part of the collaboration is likely to come from its Silicon Valley office. Shin said that the firm has been providing IT solutions for remote healthcare systems to a ``major global firm,'' and the product will hit the market this fall when the device gets a go from the U.S. Food and Drug Administration.

``Many Korean manufacturing firms sell more than 80 percent of their goods on foreign markets, but none are doing so in the service sector,'' he said. ``But for the last two years, we have been preparing to compete on the global level. It won't be easy, but it is obvious the Korean market has reached its limit.''

indizio@koreatimes.co.kr