What to expect from 2016?

What to expect from 2016?

Today I want to devote my article to Deloitte’s very important Fast 50 Turkey 2015, which recognizes the 50 most dynamic and fastest growing technology companies based on their revenue performance over the last four years. 

The overall winner this year was Cardtek Payment Processing Services with a growth of 5515 percent. Anttech placed second with a growth rate of 2126 percent in 2015, while third place was 724tikla.com with 1742 percent growth. 

Although the majority of technology companies are based in Istanbul, this year they have eight companies from Ankara, two from İzmir and one from Kocaeli. 60 percent of the listed companies are in the software business, 16 percent in telecommunications/networking and 14 percent in the internet sub-sector. These 50 technology companies, which give importance to research and development activities, achieved an average growth of 396 percent this year. The majority of the companies (17) spend 1 million euros or more on research and development, representing the highest share in this category over the last four years. 

As a reflection of the low economic growth period in Turkey in 2014, the growth rates of companies have also significantly decreased this year. Especially the share of companies with 1000-percent-plus and 500 to 1000 percent growth rates are the lowest during the past four years. For the first time the 50-100 percent growth rate category has a significant share of 16 percent. This year, the revenue breakdown of the companies that applied for the program changed - the share of companies with 2 million euros or less in revenue increased while the share of companies with 2-5 million euros in revenue decreased, significantly lowering the average amount of revenue per company. 60 percent of the winning companies have annual revenues of 5 million euros or less and 28 percent of the companies have more than 10 million euros in revenues.

Deloitte also conducted a survey with the fastest growing technology companies’ CEOs, asking about their growth strategies and future expectations. The survey also revealed the CEOs personal challenges and threats the technology industry is facing. CEOs are more pessimistic about the economy over the next 12 months this year compared to the previous year. While only 37 percent of the CEOs believed the economy would slightly or substantially grow in the next 12 months, 63 percent believed it would stay stable or shrink.

Although CEOs are more pessimistic with regards to the economy, their confidence levels in terms of sustaining their companies’ growth levels did not change compared to the previous year. Those who indicated they were “extremely confident” or “very confident” were 74 percent in 2015. However, a proportion of those indicating “extremely confident” have shifted to those indicating “very confident.” The percentage of CEOs foreseeing organic growth as the main source of growth in the next 12-month outlook increased to 74 percent from 55 percent in 2014. The CEOs are much more hesitant about VC, private equity investments as well as merger with a strategic partner options this year. Having sound business strategies and high quality employees are still seen as the top two factors to success among the Fast 50 companies in the technology sector.

The results of the Deloitte Fast 50 are very important in understanding where Turkey is heading. I see the actual list to be less important than the survey that Deloitte conducted. We have witnessed over the years that even the fastest growing companies can go bankrupt or become irrelevant as fast as they grow. 

However the key components that the CEO’s mentioned are the key points that Turkey should focus all of its attention to, namely, a sound business strategy and a high quality employee pool.