Omega featured in the Norwegian newspaper, Finansavisen
Read the article in the Norwegian newspaper, Finansavisen, about Omega and the strategy the company is utilizing in order to adapt to the difficult market. The article appeared in the newspaper, Monday 21.03.16.
Saved by international business: Omega in oil sector squeeze
After 15 years with almost endless upturns hand in hand with the oil and gas sector, the recession in the oil market hit the IT and consultant firm, Omega, in 2015.
Written by: Erlend Wessel Carlsen, Finansavisen
“The downturn started in 2013 and we experienced no growth in 2014. The turnover was stable in 2015, but has been so at the expense of our margins," says CEO in Omega, Petter Aalvik.
“Following the lower rates in the market, the prices on our consultants have also been pressed downwards.”
For the second year in a row, the numbers from the Omega concern almost flat. However, if we look to Omega AS the numbers are even more gloomy; after a small decrease in the turnover of 3,7 percent from 2013 to 2014, the revenue fell by 27,9 percent from 2014 to the previous year.
“What has happened in 2015 and what is still the situation is that we experience good growth in USA and Canada, which has weighed up for the loss in turnover in Norway.”
In USA, the growth comes from downstream operations, for example aiding the construction of a refinery. In Canada there are several large water projects.
“It was beneficial for the concern that they succeeded with this growth in 2015.”
Was prepared for a crisis
Omega started as Futura Data in 1987, and changed name to Omega in 1991. Since the company’s accounting records were registered in The Brønnøysund Register Centre in 1998, the company has with the exception of the year 2000, had a growth in turnover and result every year, from NOK 61 million in 1998 to reaching NOK 1,5 billion in 2013.
“We have thought about the fact that days like these could come. We felt that we were prepared to handle a downturn, and when it occurred, we would get through it in a robust manner.”
The previous years the company started a range of subsidiary companies, among them an IT consultant business working with other software than Omega’s own. Now, they are reaping the benefits of their investments, and realizing that their customers are more eager to listen to things that will make their business more efficient.
“We have 13 open IT positions today and want to hire more people.”
He says that they try as hard as they can to use existing personnel in new positions, but that this is not always possible.
Motivated by departures
“What are you doing to meet the downturn?”
“We have decided not to cut in the areas of management positions and on business development. Our main task now is find jobs for our people.”
Lower capacity utilization and price pressure in the oil and gas sector will produce an even lower margin in 2016, but the way the business is run today makes it possible to believe that we will keep a positive turnover.
Facsimile of the story about Omega in the Norwegian newspaper, Finansavisen. Printed Monday 21.03.16.
“We know that we have a challenging market, but try to meet it with a high willingness to work. It is sad that we have not managed to find jobs to everyone, but the situation also functions as a motivational drive for the management who are now working hard to come out of this in the best possible way,” says Aalvik.
Investing on land
The downturn in oil related assignments have forced Omega onshore, and to participate in the competition for land-based projects.
“When we experience good times almost all our capacity is tied up in oil and gas, however, when the oil market is slowing down we have the opportunity to expand in other areas. We have the opportunity to get a broader catchment and are willing to invest with loss in operations to build and secure segments of the market, and to get a passage into new markets.”
Aalvik and Omega meet a lot of competition for assignments in other sectors, but experience a good foothold compared to other consultant companies who have been heavily involved in oil and gas.
“We have a good balance and can keep our business going, maybe longer than our competitors can.”
“At the same time, I want to point out that the activity in oil and gas has not completely ceased. There are major projects that are still being completed, or will be completed. In February, we took in more people than the number of those who were terminated, and it is possible it was a gust, but if we look at the total activity level, it may go down a little but not too far, as there are many large projects on the horizon.”