Antonio Perić-Mažar (LOCASTIC): Dieses Jahr wird das bisher härteste für die IT – Keine neuen Jobs und Projekte

Prudently and self-critically, Antonio Perić-Mažar, co-founder and CEO of Locastic, evaluates the thirteen years of existence of the information technology (IT) company from Split. There have been ups and downs since its founding in 2011, with some missteps in certain economic circumstances, but adjustments and business elevation have led to a steady upward trajectory for Locastic despite the challenges. Perić-Mažar sees particularly important those tough years, as he views them as a true test for every company.

– This is how you get ruthless feedback. If you are agile, you will accept it and learn; otherwise, you will very likely not survive – Perić-Mažar is clear.

He applied this without hesitation during the first major challenge when Locastic grew to about twenty people in 2017. Due to poor organization on projects, unclear goals, and management, the number of employees decreased; however, once a reorganization plan was made and an agreement with the team was reached, there were no obstacles during the next growth phase. During the corona crisis, after initial stress, there was growth in IT and demand for digital solutions such as online communication tools, online stores, process automation, and remote work, but this was short-lived.

– It turned out that the long-term need is not that great, so in 2022 and 2023, there was a decline in investments and layoffs in IT worldwide, not just in Croatia. It was expected that the decline would last much shorter; now no one knows how it will end – Perić-Mažar is concerned.

As it goes, it goes

In fact, after everything, he believes that 2025 will be the toughest year for IT so far: there are no new jobs and projects, everything is stagnant, demand is at record low levels, and without new projects, agencies are long-term doomed to fail. Relying on existing clients, he notes, boils down to ‚as long as it goes, it goes,‘ which is not good for business.

– All colleagues are facing the same problem. Everyone is making a great effort to acquire new clients and projects; however, we are mostly encountering additional budget cuts for 2025. Additionally, there is an increase in the application of new technologies such as artificial intelligence and blockchain, but no one has a clear idea of what the world might look like in three years, let alone five or ten. We are likely living in the period of the greatest revolution humanity has ever experienced. Our challenge is that Croatia and the region are branded as an outsourcing area with cheap and quality developers. This direction is quite bad and dangerous because we are actually no longer cheap and because we are too small to be a large outsourcing region or country. We are initially losing that battle to cheaper and more populous labor from the east. Therefore, we need to focus on our experience and knowledge from various sectors, i.e., the added value we can provide to clients regarding product development and problem-solving. Instead of just lending them people who write code, we must be the ones who help them build their business – explains Perić-Mažar.

Uncertain Future

For Perić-Mažar, therefore, a tough 2024 was expected, as the consequences of the general market situation have also reached us. Locastic ambitiously envisioned last year’s growth of about twenty percent, but already in the first three months, several larger projects stalled. They managed to reorganize and close some smaller projects, so revenue will remain the same as last year, but with a deviation of five percent, up or down. Profit will be somewhat lower as costs have risen due to inflation, as well as due to wage increases in the first half of the year.

– The year 2023 was still good for most, as there were budgets from 2022 carried over into 2023. Now that they have been spent, at the level of the entire IT industry, we could have a worse 2024. This can also be seen in the decline in profits of the largest IT companies and from their quarterly reports. Although some analyses show a growth of about 10 percent in 2024 for Croatian IT, I would take those numbers with a large dose of caution. All business owners and entrepreneurs are looking to the future, not the present, and it is clear that this future is uncertain, with very low demand and few new jobs in the market – claims Perić-Mažar.

In such circumstances, Locastic achieved 2.33 million euros in revenue in 2023, which is 31.50 percent more than in 2022, and net profit increased to 226,882 euros with a growth of 69.60 percent. The increase occurred due to signing a new large contract with a company from Texas and the growth of business with existing clients, so Perić-Mažar emphasizes that financially, 2023 was their best year so far. The growth was also influenced by the increase in quality and number of people in the team at the end of 2022 and in January 2023. Despite the fact that there were no additional larger investments, he said, there were good contracts from 2022, well-optimized processes, and utilization of human resources on projects. Compared to 2022, costs for attending conferences were lower, but with all these numbers, Perić-Mažar is still not completely satisfied, even though everything is going in the right direction.

– It would be very good if we did not revolve exclusively around tourism, as IT can and should provide much more. Strategic support from the government would certainly be welcome; I hope that through CISEx, we will at least manage to achieve part of that. And slow bureaucracy is not a characteristic of just Croatia, but of all of Europe, although the situation has improved somewhat over the years. In Europe, we generally deal too much with regulations.

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