Interview with Canadian-born general manager of the Kvazar-Micro Corporation
Canadian born Bohdan Kupych, an ethnic Ukrainian, has been a top manager in Ukraine since 1992 and has held posts at Digital Equipment Corporation and Ukrainian Mobile Communications. Kupych, who temporarily left Ukraine in 2001, returned this month as general manager for Ukraine of the Russian- and Ukrainian-owned Kvazar-Micro Corporation. He is also vice president of the IT company. Kupych is one of a handful of western top managers working for local business interests. The Post spoke with him on Oct. 11 at the Kyiv headquarters of Kvazar-Micro Corporation.
KP: Who initiated the idea of you joining the management team of Kvazar-Micro?
BK: I was working for a company called SAS Institute from February of this year until September. I was asked to help with business development to get their operations up and running in Ukraine and one of the first people I came into contact with was Yevhen [Utkin, president and CEO of Kvazar-Micro]. He certainly knows the industry. We started discussing his ideas at that point. That was in April.
We found some common ground and hit it off. I was intrigued by his plans and we arrived at the point where he asked me to come on board. We both understood where I could bring value to the company and recognized that there was a vacuum created with the move of many of his top managers to the new Moscow headquarters. [After Moscow’s Sistema group bought a 51 percent stake in Kvazar-Micro in September, Utkin moved the company’s Moscow offices.] Anyone who knows Kvazar-Micro knows that Yevhen [Utkin] is the company’s brand. Kvazar-Micro and Yevhen Utkin are synonymous.
But he needed a person on staff who knew the industry, had some western and Ukrainian business experience and could help the company become more international. I was a good match.
KP: You are best known for working as marketing director at UMC from 1998-2001. What have you been doing since you left UMC?
BK: I’m not sure I agree with you that I’m best known for working at UMC. I ran Digital Equipment Corporation’s operations in Ukraine from 1992-1998. We were the first international IT company in Ukraine. During that time we did a lot of very innovative things. People in the industry still remember me from those days.
In 1998 I was asked to join Ukrainian Mobile Communications, which is still considered to be one of the most successful companies in Ukraine. So I think people remember me for my experience with both companies.
In late 2001, my family and I – I have three children – decided to go back to Canada and recharge the batteries. I was originally supposed to only be in Ukraine for two years, but then it became three years, then six years, and then almost 10. During my time in Canada I looked at opportunities within the IT industry, but it always seems I was pulled back here. I quickly understood that I had developed an affinity to the region for a number of reasons: my Ukrainian background and because I think it’s possible to make a difference here.
Also, with Kvazar-Micro I see the opportunity to take part in changing the paradigm: from countries that take western technologies to countries which have something to offer the rest of the world. This is very interesting.
Look at the history of high-tech development in Ireland. The country became a high-tech leader in the EU through a clearly defined plan of attracting high-tech industry through government policies, tax policies, proactive business development and encouragement of multinational companies to invest in Ireland. It’s a success story, and Ireland is still doing phenomenally well in Europe. We talk internally of Ukraine as Ireland II.
What are the things that Ukraine, Russia and other former Soviet Union countries have that is unique? We all know about the intellectual capabilities that were here in the past, and that still exist. The institutes, the universities, all of those capabilities could be used more effectively. Part of our idea is to break the traditional paradigm and start making use of those abundant resources.
KP: There has been a change of ownership at Kvazar-Micro in the last couple of weeks – 51 percent of the company was sold to Moscow-based Sistema Group. In light of this transaction, what will be your role at Kvazar-Micro?
BK: Roughly half of my time will be spent filling the vacuum left by Utkin’s move to Moscow and ensuring that Kvazar-Micro continues to hold its leadership position on the market. Also, I’ll ensure the continued growth and development of our business in Ukraine.
The other half of my time I’ll work as vice president of business development for the corporation, which is located in about 11 countries today. We will continue to look at new opportunities in those places, and in new places like the United States.
KP: What are Kvazar-Micro’s expansion plans?
BK: The company currently has five directions. We manufacture laptops, PCs and servers in our Kyiv factory, which, by the way, was an investment by the European Bank for Reconstruction and Development. We have a very large distribution business working with companies like Intel, HP and others, which makes up a sizable part of our business today. We also have several training centers, where we do a lot of IT education and training. And we have software development and systems integration businesses, which are both areas where I see a lot of opportunity.
In terms of systems integration, we see an increasing need for company-wide solutions – whether it’s banking, telecom, manufacturing or the government sector – and that is exactly the kind of business we are going to be developing.
Software development is also very interesting. There are several directions within this business. First, we look at products that are produced in Ukraine and that are marketable here and elsewhere. One example is the software that Kvazar-Micro developed for the nation’s educational system. It’s a computer-based handbook in the Ukrainian language.
And there are other innovative software products that can be exported. We have people producing mobile gaming programs. Additionally, we see software development opportunities in outsourcing. Today India is a leader in outsourcing, but Ukraine also has excellent intellectual capabilities, the resources, the programmers, and a long history of innovative research. By combining these, we see a unique offering that differs from what India can offer.
KP: Can you provide some specifics as to how the company has performed in terms of sales, revenues or other figures? Also, please elaborate on some of your company’s big future projects. For example, does Kvazar-Micro have plans to build new computer factories, distribution networks or other big factories in Russia?
BK: Unfortunately I can’t give you too many details because they are all still being formulated. As far as specific numbers, I’m not at liberty to share them with you at this stage.
KP: You’re one of a handful of Western managers who works at the helm of a locally-owned company. What are the benefits for Ukrainian companies of hiring western managers and what are the negative aspects of doing so?
BK: I think it’s a combination of having western experience with large IT companies and having relevant business success in Ukraine. UMC, by the way, was 51 percent owned by [state-owned fixed-line telephone company] Ukrtelecom and western shareholders Deutsche Telekom, Teledanmark and KPN Telecom when I was there. The UMC brand was ranked second among national brands.
At UMC, much of the senior management was from the [western] parent companies and there were a few senior Ukrainian executives. The approach was that I called for an international approach to business. In other words, an open and transparent compa…no different than any joint-venture that Deutsche Telekom, for example, would have anywhere else in the world.
The management style was western-oriented, but adapted to the Ukrainian environment.
KP: Now you’re working for a company that is 100 percent locally owned. Have you noticed anything different about Kvazar-Micro compared to western-owned firms in the short time that you’ve been there?
BK: I’m sure there are a lot of differences because historically, the people here have worked in the former Soviet Union at Kvazar-Micro. I can bring multi-company experience, from large companies in Ukraine and the West, to the company. I believe I have something to contribute. Kvazar-Micro has grown from a small company to a large company, and many of its employees have grown with it.
KP: Why did you choose to return to Ukraine?
BK: I’ll put it this way. It’s hard to get an interesting job in the West, from what I could see. In business it’s plus or minus five percent or ten percent. Here there’s the ability to do things that are plus or minus 50 percent.
Things move faster in some ways. There are opportunities that present themselves that are not available in the West. It’s harder to start something from nothing in the West, whereas here it’s common and you can actually experience 1,000 percent growth in a company.
KP: Working here can be more challenging than working in the West, but are salaries for western top managers in Ukraine competitive?
BK: I’m not going to give you a number, but it’s quite good and no different than what I would expect in the West.
KP: How do you think UMC has performed as a company since you left, specifically in terms of their marketing strategy?
BK: I think it has gone forward very well, in a logical way. It’s still a very strong brand and still a very successful company.
KP: How is the Kvazar-Micro brand doing?
BK: It’s a very good, strong brand in Ukraine. You can ask anybody in the industry and I’m sure they will tell you it’s a good company. However, we have five different business units under this brand now, and it’s going to be my responsibility to look at the brand and determine whether it meets the demands of the future.
Secondly, Kvazar-Micro is now in Russia and other countries. Unless you are in the IT industry, you will not necessarily know what Kvazar-Micro is. So there is a challenge to develop the brand in other countries.
KP: So there may be changes in the Kvazar-Micro brand in connection with the company’s expansion into Russia and other regions?
BK: We may move toward unification or other things that would strengthen [the brand].
KP: How has Ukraine changed since you were last here?
BK: On the one hand there have been phenomenal changes, but a lot of other things have not developed the way that they should have developed. I think in the early days, in 1992, there were no problems in gaining interest, as you were the first. There were no hidden agendas.
If you look at the ways business is done in Ukraine now, there are two ways. One is to compete; the other one is Ukrainian-style. And there is still a lot of business that takes place Ukrainian-style. But in the early days there was interest in what you had to offer. Of course, in the IT industry, there were a lot of people interested in buying as many computers as they could afford and then trying to figure out what to do with them. Now there are companies that are looking for real business solutions with sophisticated software from abroad or locally developed software. So we see a lot of potential in the systems integration business.
Also, competition is increasing. Gone are the margins of the old days where business was fairly easy: You may have had a monopoly or were able to charge a lot for your services. Companies are recognizing the need to become more efficient as a business by integrating different departments of the company. That’s where the system integration approach comes in; you are helping companies gain a competitive edge.
KP: You brought up the issue of Ukrainian-style businesses and the issue of companies becoming more efficient. Is moving the headquarters of Kvazar-Micro to Moscow a way of becoming more efficient?
BK: I think that becoming an international company is part of a very clear goal, and international companies need to be transparent and open. And I think that is a strategic direction for the company.
KP: Do you think, though, that Ukrainian companies that want to become international need to move to Moscow?
BK: I think you go where the market is, and I also think it’s great that a Ukrainian company is becoming an international one. There is a market in Ukraine and we are going to continue growing our business here aggressively. But there is also a market there, and if there is a market in Kazakhstan, Uzbekistan or in other countries and our business model fits, why not.
There are examples of companies that started out in their own countries where their revenues became bigger outside of their own countries. And this is certainly doable. I think the resource base for this company will remain in Ukraine. It is planned to be 70 percent in Ukraine and 30 percent elsewhere. The company has only sent a few people to the new headquarters, but Kvazar-Micro has close to 1,000 employees. So a good percentage of the resources will remain in Ukraine.
For example, there is a big Oracle software implementation project going on in Moscow today. Most of the specialists implementing it are from Ukraine. And they are implementing it at a very large company in Russia. Why? Because the business model is more efficient that way.
We can deploy our expertise wherever needed, whether it’s in Serbia, where we did a project for the World Bank, or Kazakhstan, where we have also completed projects. We go where there are opportunities. We also see that there are going to be more and more projects in Ukraine as well, and that’s an equally important part of our plan.
