The co-founder of Hedgehog Lab tells Pound Sterling Live the company has been hugely effected by currency fluctuations but is heartened by increase in non-EU exports.
Hedgehog Lab is a global technology consultancy that works in the digital sector designing and building software for businesses, predominantly apps.
The company was founded in 2007 by two friends who thought they might have hit a glass ceiling in terms of progression, and decided to create a company together.
Now, almost 10 years-on, Hedgehog Lab, based in Newcastle, defines its main clientele as from outside of the UK, “A majority of our export work are projects we undertake from the US and Asia”, says Co-founder and Chief Executive Officer Sarat Pediredla. “But Europe was a growing factor pre the referendum vote. Currently, our export revenue is around 60% of our annual revenue, which is significant. “
The company grew from a software developing agency to focus fully on apps, and has since been working towards measures in European compliance.
However, Sarat says they are now unsure of the future when it comes to European regulations. “We have been preparing for ISO standard certification in 9001 and 27001. We hope that these regulations will continue but there is a great deal of uncertainty.”
“We have been hugely effected by the currency fluctuations of Sterling against Euro’s and Dollars. We get paid a lot in Dollars and Euro’s, and we then have to convert money back into dollars / rupees to fund our overseas offices. I would say we have lost at least 5 figures+ in FX trades in the recent months due to the weaker pound.”
With such an enormous amount of money lost, surely Sarat would consider passing on an increased cost to his customers? Apparently not.
He says, “we’re not currently as the strong Dollar has helped us increase revenue significantly and will continue as long as the pound is weak but it has become hugely expensive for us to do business in Europe now. Although it is heartening that our non-EU exports have increased, we are worried that there is a real risk to our EU exports.
“However, our long term strategy has not changed, it remains to expand globally by capturing regional markets and create a global footprint. Our ambition is to be, at least in the short-term, the biggest app consultancy in the UK. But we’ve got global ambitions, pre-referendum we wanted to strengthen our US presence in the next year and a half. We were also looking to grow in India and continental Europe. But our short-term strategy has had to change to adapt and we find ourselves stalling European deals or sales due to the strength of the Euro against Pound.”
And although the UK has a population of more than 60 million people, and it may sound like a lot to choose from, Sarat believes a cap on freedom of movement could restrict further talent from wanting to join his business.
He says, “We offer attractive salaries. We’re able to do so because we are a premium business and charge a significant amount for what we do. In terms of benefits, employee satisfaction is up there.
“We’re on Glassdoor, an employee satisfaction site, and we’re one of the few companies that has a full five-star rating. The ratings are complied through independent reviews from ex and current employees. I’m very proud of the culture we’ve built in our business – it is such an open, honest culture.
“I’m the CEO and my staff won’t hesitate to approach me and be honest. It’s a culture where the intern can criticise the CEO, and people are genuinely enthusiastic about coming into work each day.
“Also, we offer private healthcare and most of our staff get unlimited holiday – it’s part of our culture, treating staff as adults. Most of our employees come into work 9-10am and leave at 5-6pm, so it’s a good work-life balance, too. Although freedom of movement wouldn’t effect us currently, we do feel that free movement in Europe would benefit our business; especially with our plans to expand in Europe and send our team overseas.”
So does Sarat see any further complications arising out of Brexit and what would he say to new Prime Minister Theresa May?
“I think it's difficult to foresee complications as it's not very clear what the true outcomes of Brexit will be. With Japan warning about their companies pulling out and the US prioritising EU negotiations, we are concerned about the global impact this will have and as a global business, how it will effect us. I think that we need to build global confidence in our capability to execute the Brexit deal efficiently and quickly.”
Hedgehog Lab are a UK company that currently complete over 60% of their work for clients based abroad, a shock in currency prices could harm not only their expansion plans, but also customer relationships. Especially if added currency costs are added on.
As Sarat says, “The longer this drags on, the longer impact it will have on markets and our relationship with the rest of the world.”