Thoughtworks IPO: Riding The Digital Transformation Wave

Thoughtworks, which is a global technology consulting firm, pulled off its IPO today. The company issued 36.8 million shares at $21 each, which was above the $18-to-$20 range. The shares gained 40% to $29 on the debut. 

The CEO of the company, Guo Xiao, joined as a programmer in 1999.  “I still consider myself a technologist,” he said. “I code as a hobby but not for production.”

His technical chops have definitely been critical. After all, Thoughtworks has been a major influencer of key trends in IT since its inception, such as with agile development, microservices, the data mesh and CI/CD (Continuous integration and continuous delivery). 

Note that the company has created numerous open source projects. One is CruiseControl, which is a pioneering system for continuous integration. Then there was the development of Selenium. It has become a critical part of the stack for test automation. 

There has also been much thought leadership from the company. Consider that the employees have written nearly 100 books.


Now when it comes to tech consulting, the perception is that it can be difficult to grow efficiently. The main reason is that there is an ongoing need for recruiting people.

But as for Thoughtworks, the company has been able to build a platform that has proven to scale. Part of this has been due to its own creation of software and systems. But the company has also built a strong training program, which is called Thoughtworks University. There is also a budget for employees to purchase their own educational materials or programs. 

“A developer can no longer learn one language and stop learning,” said Xiao. “There must be ongoing learning.”

And the strategy is certainly paying off. Last year, about 92% of the revenues came from recurring clients. What’s more, 24 clients generated between $5 million to $10 million and 23 clients were responsible for over $10 million

The Market

The opportunity for Thoughtworks is substantial. According to research from MarketsandMarkets, the spending on digital transformation is forecasted to double to $1 trillion by 2025. 

Then what are some of the main themes? Here’s what Xiao is hearing from his customers:

  • Enterprise Modernization: This generally is about upgrading mainframe and traditional Windows environments. But this does not necessarily mean a lift-and-shift to the cloud. The projects are also be about getting more from existing systems, which can mean lower risks for the modernization. Keep in mind these technologies are often built for mission-critical operations.
  • Data and AI: Companies want to find ways to be more data-driven. But this is more than just spinning up some algorithms. “We find that 80% to 90% of successful AI and machine learning is about data preparation, such as with cleaning the data and updating it,” said Xiao. 
  • Customer Experience: With the ubiquitous use of apps like Uber, Airbnb and Amazon, consumers expect a seamless design. However, this can be extremely difficult for companies to achieve, especially with omni-channel experiences. 

The Future

It was a decade ago that Marc Andreessen wrote his Wall Street Journal article entitled “Software is eating the world.” And yes, this was prophetic.

But Andreessen did not imply that traditional businesses were doomed. He noted that they had strong advantages, like trusted brands, extensive distribution, and talented employees.

Yet to succeed, it is often about partnerships. In other words, this is why the future for firms like Thoughtworks is so promising.

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