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Business
IT cos. leverage tieups to combat downturn
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Some key factors have separated the winners and losers in the infotech race.
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WHILE THE bottomline of several software companies has taken a beating due to the ongoing crisis, a few companies have bucked the trend to present a growth rate of 30 per cent and above surpassing analysts' estimates of low growth rates in the second quarter (Q2) results for fiscal 2001.
New process centric paradigms, marketing initiatives, expansionist modes and recruitment drives are some of the key factors that have separated the winners and losers in the infotech race. Surprisingly, several companies have performed well, post September 11 with addition of new clients and mergers with smaller firms.
New process centric business models: The results of Wipro and Infosys pepped the market with their profit growth of 40 per cent and 30 per cent respectively which has partly been attributed to the process-centric paradigms adopted by these companies.
Wipro reported a net profit of Rs. 216.5 crores for Q2 ended September 30,2001 with revenues of Rs. 877.6 crores for the same period. ``Eventhough the current economic slowdown has adversely impacted the IT industry in India, the Six Sigma quality process has enabled Wipro to post a good profit margin,'' Wipro Infotech president, Mr. Suresh Vaswani told this Correspondent. Wipro has 700 professionals working on seven Six Sigma projects.
Infosys has embraced the PSPD business model-predictability, sustainability, profitability and derisking, which ``has helped the company to maintain a sturdy growth over the years, ''Infosys spokesman said. The business model has changed from mere product-focussed development to customer-focussed product development as implemented by IonIdea Interactive and Bangalore-based start-up firm Aarohi Communications.
Marketing initiatives: The U.S. is no longer the must-be destination for most software firms. New markets like Japan, Malaysia, Australia, Africa, France and Germany are being aggressively explored by companies.
For instance, i-Flex Solutions, the banking solutions software provider markets its Flexcube banking software in French, Spanish and Arabic interfaces to ``tap into multi-linguistic and multicultural markets,'' i-Flex corporate marketing head Mr. V. Senthil Kumar said. The banking software firm is aggressively ramping up operations in the Apac region and Japan. i-Flex posted a growth of 60 per cent in net profit with Rs. 23.22 crores for the first quarter of fiscal 2001 compared to Rs. 14.47 crores in the corresponding period, last year. IonIdea Interactive, a Bangalore-based software firm has expanded its presence into France through a tie-up with Sodexho. The company is also actively looking at the Australian market to expand its presence. Wipro Infotech has also opened its office in Sydney to tap the Australian-New Zealand markets.
Expansionist mode: The expansion of the existing customer portfolio along with a merger and acquisition strategy adopted by software firms has allowed many companies to generate profits. The classic example is bigdaddy Wipro which acquired 26 new customers during Q2 with 11 of these clients bagged in the post-September 11 period. Wipro also set aside $15 million for investment in IT-enabled companies, besides an investment of $10 million in Spectramind eServices Private Limited.
Bangalore-based Kshema Technologies added 13 new customers during the quarter. ``Though our existing customers have downsized they are still present on our client-portfolio,'' Kshema Technologies president and CEO Mr. Anant Koppar said. Besides this, several companies like i-Flex and IonIdea have leveraged on their strategic tie-ups to combat the economic downturn.
Recruitment drives: Bluechip firms have embarked on stringent recruitment policies with Infosys leading the pack, where the focus has been on hiring experienced software professional or lateral recruitment. Wipro has slowed down on its campus recruitment drive. Aarohi Communications is primarily recruiting networking and storage systems engineers for Storage Area Network, its area of specialisation. Kshema while reiterating its recruitment strategy has hired local sales and marketing people for its office in Canada. ``Need-based recruitment has become the order of the day'', IonIdea Interactive vice president Mr. Sridharan Narayan succinctly explains the new recruitment mantra.
Preeti Mishra
in Bangalore
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