When Rudolf van Megen co-founded Sqs Software Quality Systems Ag (LON:SQS) in 1982, he set out to build a software testing business that offered an outsourced option for companies that were grappling with increasingly complex technology and the challenges of getting software systems to work together correctly. These days, SQS is one of the world’s largest pure play suppliers of independent software testing and quality management services but the company remains focused on adapting its business model to meet market demands.

During the last 18 months SQS has invested significantly in building its presence and capacity to handle lucrative and longer-term managed services contracts by growing its offshore capabilities and hiring and training new staff. In the half year to June, the impact of that strategy dented pre-tax profits – down to €2.4m from €2.7m previously – but turnover was up by 9.4% to €73.9m as the percentage of sales from managed services rose from 3% to 7%, on orders worth €40m during the period.

Among its first-half contact wins, the company picked up deals with financial services groups Allianz and SEB; retailers Morrison (WM) Supermarkets (LON:MRW) and Sainsbury (J) (LON:SBRY); energy groups Noble Oil (NYSE:NBL) and Statoil (OSE: STL, NYSE: STO) and technology groups Nokia (NYSE:NOK) and Pace Micro Technology (LON:PIC) . For the management team at SQS – including CEO Rudolf van Megen, CFO Rene Gawron and executive director David Cotterell, the five year plan is to have 50% of group revenues derived from managed services. Stockopedia spoke to the SQS management team about their plans for growing the business in the future.

Rudolf, would it be fair to say that you are satisfied with your interim results given the economic conditions during the last 18 months?

Rudolf van Megen: On one hand, yes, we are. But on the other hand we are also happy that we are back to growth and that we have made investments to really grow and improve in the second half and into the future.

You will have probably recognised that SQS is focused on investing for the long term. What we could…

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