At the end of January 2017, at least 120 software developers in Bulgaria - junior as well as senior ones - lost their jobs in a rare development for the country's overheated IT market that demands 50,000 developers, according to HR specialists. The layoffs were a result of a swift change in fortunes at one of the most successful Bulgarian software companies.
In 2014, US-based company Progress bought Bulgarian software developer Telerik for $262.5 million, which is still the biggest acquisition in the Bulgarian IT sector so far. Two years later the company's performance worsened and the Bulgarian division in particular couldn't meet the expectations of the investors. Progress decided to cut 20% of its workforce globally, or 450 jobs. By this time Telerik employed more than 800 and that staff was reduced by between 120 and 150 people, according to different sources.
Several weeks before the layoff announcement the four co-founders of Telerik - Vasil Terziev, Svetozar Georgiev, Hristo Kosev and Boyko Yaramov - said they ware leaving the company to dedicate themselves to their spin-off educational project Telerik Academy.
Founded in 2002, Telerik has specialized in software tools/subscription services for web, mobile, desktop and cross-platform applications development. The business was started off modestly by four Bulgarian entrepreneurs but soon Telerik grew to a global software platform with 1.5 million customers who used its products to develop user interface.
Between 2008 and 2013 the company, backed by its investor Summit Partners, acquired six companies abroad - Germany's Vanatec, the US' ArtOfTest and Fiddler, Canada's TeamPulse, the UK's Expansion and Denmark-based EQATEC Analytics. As of 2013, Telerik had 800 employees in 11 offices.
The first problems came just before its acquisition by Progress. In 2014, 50 jobs were slashed as Telerik's results deteriorated, both in terms of revenue and profit. But the acquisition by Progress made the company shine again.
Riding a wave of enthusiasm, Telerik launched an ambitious project called Digital Factory. The platform targeted a $270 billion digital transformation platforms market but failed to position itself. As a consequence, parent company Progress recorded a non-cash impairment charge of $92 million by the end of 2016 and had to cut costs.
In October 2016 Progress appointed a new CEO - Yogesh Gupta, who launched a major restructuring drive. At the end of 2016 the company unveiled a new product strategy, under which it discontinued investment in its Digital Factory offering. Progress also announced a new strategy to flatten its management structures and cut 20% of jobs, hoping to reduce costs by $20 million by the end of 2017.
Life after Gupta
As of the first quarter of 2017 the Bulgarian development division will focus on the profitable Telerik Platform and its go-to-market strategy, according to the company's last financial report.
As a big part of the staff laid off at Telerik occupied senior positions and received munificent compensations, as Chief Transformation Officer Faris Sweis has confirmed, a lot of IT analysts in Bulgaria expect new start up projects to emerge.
Meanwhile, the co-founders of Telerik Georgiev, Terziev, Yaramov and Kosev are developing their educational project Telerik Academy and may take back some of their former employees.
Alexandra Kozbunarova is formerly with Capital Weekly, now she is coordinator in Move.bg