The Pleasanton, California-based vendor announced today from its user group conference in San Francisco that it is expanding its operations to Asia with a new office in Hong Kong despite a slowdown in the economy in the region. PeopleSoft is also planting its flag in Europe with a new office in Switzerland.
It's a move PeopleSoft needs to make. Despite its ranking among the top business software firms, PeopleSoft has struggled to sell its products beyond U.S. and Canadian borders.
"In order to stay competitive, PeopleSoft needs to build its non-U.S. presence," said Steve Bonadio, analyst at the Hurwitz Group in Framingham, Massachusetts. "The foreign market is still a very small chunk of their overall sales."
PeopleSoft is banking that by building a presence in the markets now, when the Asian recovery begins it will be ready to take on new sales. Foreign sales were about $55 million of PeopleSoft's revenue during the recently ended third quarter, a 58 percent increase from the previous period in 1997. PeopleSoft's total revenue for the period was $351.3 million.
"Hong Kong gives us a toehold into China, an acknowledged important emerging economy," said Howard Gwin, PeopleSoft's general manager of international operations. "And Switzerland completes PeopleSoft's coverage of the leading European financial services markets."
Bonadio said PeopleSoft's best chance for reaching international users is with its human resource applications because of the firm's long standing expertise in the field.
"The European market is still pretty robust and there are signs lately of a rebound in Asia," Bonadio said. "So given those signs, it is important for PeopleSoft to establish a presence out there in a major market and obviously Hong Kong is a major market. I don't expect them to open offices in Vietnam or Indonesia or South Korea but this makes sense. If there is rebound, then PeopleSoft will be ready to start making some sales there."
PeopleSoft has already begun its Asian push opening earlier this year with an office in Singapore.