With thousands of global clients dependent on its market data, Thomson Reuters needs to blend first-class journalism with smart technology platforms. Gop Menon, chief financial officer for the firm’s Middle East and North Africa region, discusses the company’s drive to boost its tax business.
Gop Menon recalls a moment that perfectly sums up the mercurial nature of his industry. “I was at a conference in 2008, shortly after the Financial Crisis had begun,” he says. “Staff across industries around the world were being cut, but I seemed to the only person saying we were recruiting. I guess you could say bad news all round equalled good news for us.”
Thomson Reuters subsequently invested $10 million in its regional operations, focusing on organic growth. The investment has proven to be a well-advised. Over 350 staff now sit in the Dubai office today, while 700 work across the Middle East and North Africa region that Menon’s work covers. Menon manages a finance team of nine from the Dubai office, with some operations outsourced. “Our financial controllership is carried out in Bangalore, where we also have about 4,000 global staff,” Menon says.
Previously working for Reuters’ group finance division in London, Menon gained high-level experience on a range of transformation initiatives, including a cross-organisation restructuring project with the CEO office .. Menon arrived in 2007 – when Thomson Reuters had 90 staff in its Dubai office – working for the organisation’s financial business across the Middle East and Africa region. He was named chief financial officer in 2014.
Around “90 percent” of Thomson Reuters’ business in MENA is related to the financial services industry, while revenue resulting from the media business – news, images and video – totals roughly 2 percent. “We’re a wholesaler of news,” Menon says. “That means we provide content for sale, as a feed, for our clients to consume.”
“The news agency business is how the Reuters side of the business initially started, and the news developed from that side goes into our financial, legal and tax products,” Menon says.
At the core of the news & content gathering process lies Thomson Reuters’ strongest asset, and Menon’s heaviest expenditure. “Our biggest cost is people,” he says. “We are in the business of collecting content and data, and in order for that to be dispersed worldwide, it’s essential to make an investment in people in order to carry out that process.”
Turbulent economic conditions in the region have once again worked to Thomson Reuters’ advantage, with the firm seeking to expand its reach beyond its financial services platforms. Thomson Reuters recently hosted its ‘MENA Evolving Tax Landscape’ conference, which gathered a selection of highly regarded speakers, including representatives from the IMF and Qatar’s Ministry of Finance.
This is a precursor for the firm’s increased efforts to highlight its other lines of business. “We’re aiming to position ourselves as thought leaders in several spaces, including tax,” Menon says. “We’re trying to say that we have much more than a financial business. Obviously, we’re helped by the fact that VAT’s come into the region, and we’re trying to establish ourselves as the software solution provider for indirect tax calculation & compliance.”
Tax and accounting has been a big focus for Thomson Reuters, but, unsurprisingly, primarily in the US, and in jurisdictions with more mature tax environments. “For us, the thread that goes across our business is providing information, data and analytics to professionals in industry,” Menon says. “We want to show how clients can manage their risks and market turbulence.”
Menon believes that while some CFOs may still be in a state of denial regarding VAT, the time for action will inevitably come. “I think a lot of my peers still think that we’ll get to January 2018, and the government will delay the introduction of VAT for another 12 months,” he says. “We do feel that a lot of people are burying their heads in the sand with VAT. But this is real, and it is coming. Saudi Arabia recently announced that VAT will come into effect on 1st January 2018, and I expect the UAE will shortly do the same thing.”
Given the range of IT platforms that Thomson Reuters depends on – and with so-called ‘hard’ journalism at its core – many will ask whether it should be classed as an information or technology company. Eikon, Thomson Reuters’ flagship financial product provides data from exchanges around the world, featuring analytical tools for finance professionals. “We are a technology firm,” Menon says. “It’s a bit of a conundrum for us. We see ourselves as a technology company, with data at our core. It’s the way the world is evolving. There’s now a data overload taking place, so it’s crucial that we can make tools smarter so they are able to filter the right data.”
Given the importance of data delivery in Thomson Reuters’ work, and with competition with rival Bloomberg always intense, a lack of timeliness in transmitting information can lead to irate financial customers. “Fractions of a second become very important in our industry,” Menon says. “We make sure we invest in latency in order to deliver real-time, accurate data.”
Although the company’s primary business is the gathering of financial data, Menon and the Thomson Reuters team also have a mandate to monitor developments that go on behind the scenes across the region. Suffice to say, this is often easier said than done. “Transparency can be an issue,” Menon concedes. “Our strength lies in reporting on public companies, but we’re always aiming to get a deeper understanding through a number of channels.”
The firm is making a number of in-roads to expand its reach in terms across the Middle East. Menon speaks particularly highly of the 2012 acquisition of finance and business news portal Zawya, which has added clout to Thomson Reuter’s Middle East offerings. “It’s added another tier to our customer base,” Menon says, “and is fantastic for private company information across the GCC and MENA regions.”
In late 2015, an Emerging Businesses unit was established within Thomson Reuters, with three main initiatives comprising the unit. Chief among them is the Accelerate SME platform, which is a community platform to give an avenue for businesses to interact and develop their business The tool allows users to grow their profile through adding data on their business, and allows them to be “rated” via an algorithm.
With the delivery of real-time data a necessity in Thomson Reuters’ line of business, Menon always has a series of pressing concerns at hand. “The biggest challenge I face today is balancing priorities,” Menon says. “Our financial business is still maturing in the region, and is our cash cow, so we need to ensure that that ticks along whilst ensruing that we invest enough in our growth businesses – risk, tax and legal. We need to put the right resources in the right place so that we can provide adequate growth for other units.
“Even in difficult times, everyone needs clarity, data and information, and to make sense of what’s going on. As a data provider, we’re well placed to make use of analytics to shed more light on a situation.”