Sword case study

With clients in over 34 countries around the world, the Sword Group has come a long way since it was founded by Jacques Mottard in France in 2000.

The UK has always been a firm favourite for the company when considering expansion overseas.

Its first UK acquisition took place in 2002, and Sword UK is now the company’s largest subsidiary, encompassing over 50 per cent of its business.

“Not only is the UK economy flexible, but when we tested the cultural behaviour of the work force, we were really impressed,” explains Heath Davies, UK Managing Director of Sword. “People are important to us, and we find that employees here really want to feel part of something they can contribute to.

They are happy to join the team effort of our business not just within their own teams, but across the UK and even globally.”

Plans for growth

The Group focuses its specialist IT products and services on key market areas, including banking, underwriting and the oil and gas industry. When its business plan for 2007 to 2010 identified a need for the company to grow its products portfolio, Sword decided to set up a centralised R&D centre to help it achieve this goal.

They had a choice of locations, including China and Russia, but the final choice came down to India or the UK. The company already had a presence in both, and whilst India had much lower set up costs, the high level of staff turnover there was a cause for concern.

“Employees in the UK really want to feel part of something they can contribute to”

“We were not just interested in commercial suitability,” says Davies. “We also needed a place with a strong skill pool, where employees stick with the job. Our technology is very specialised and we don’t want to spend 12 months training someone up only to have them leave. Unfortunately, staff turnover in India is around 25 per cent, compared to less than four per cent in the UK.”

Financial incentive

UK Trade & Investment in Lyon met with Sword in 2007 to find out how it could help them. Having assessed the company’s needs, they arranged for them to meet representatives from regional development agency Yorkshire Forward, Scottish Development International and International Business Wales. They gave Sword information about their specific regions, and significantly about grants available to overseas investors. With only the set up costs working in India’s favour, these grants were crucial to secure the UK as Sword’s preferred location.

“We were looking for help to overcome the additional costs involved in setting up in the UK,” says Davies. “The Welsh Assembly Government was very understanding and easy to work with. They really appreciated our business needs and helped enormously in justifying the commercial case. Their grant of £3.6 million represents a 30 per cent saving against employee’s salaries for the next two years. This was the finishing touch to the UK’s offer.”

The ideal site

Sword decided on Cwmbran as the site of the new Research Centre, as it has great links to London, where many of its sales and products division is based, and to Bristol and Cardiff which are strategic targets for the company.

The Centre is due to open in January 2008, and will employ 60 people in the first year, increasing to 200 employees in the next two years. Half of these will work in R&D, a quarter in third party administration and a quarter in high level consulting.

“The Group is very confident about our new operation in Wales,” says Davies. “It has the right skill pool and employee loyalty. And it’s ideally situated, geographically, to supplement the support already provided to our UK operations.”

Sector Focus

• The UK is Europe’s leading investment market for software and IT services

• The ICT sector accounted for 19 per cent of all inward investment in 2006/7

• There are more software start-ups in the UK than anywhere else in Europe

• The UK is home to over 100,000 specialist software houses

• The UK controls 20 per cent of the global market for IT security products

R&D in the UK

• Many of the world's most innovative companies have established R&D facilities in the UK

• In 2006, the UK Government spent over £10 billion on training programmes to enhance the development of the UK workforce

• The UK has 170 universities and higher education institutes, including the top six universities in Europe and two of the top three universities globally

• The UK Government offers financial assistance to domestic and foreign-owned companies carrying out R&D in the UK.

This is done through R&D Tax Credits and Allowances; Grant for Research and Development; EUREKA; and the European Commission framework programme.

Sword in the UK

Sword has a strong track record of acquisition in the UK, for example Intech in London in November 2005 and Apak in Bristol in July 2007. Once part of the Sword portfolio, these companies are given all the advantages of being part of the International Group and helped to grow.

“When we acquire a new company, our goal is to revitalise it,” explains Davies. “We often invest in refurbishing premises, setting up new international offices, and enabling it to grow by leveraging the Group’s balance sheet. Two years after acquisition, the company becomes a fully integrated part of the Sword Group.”