13 - Shackled, But Sprinting

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In a year  when domestic IT growth and profit has been under pressure,

Government spending slashed, public-sector structuring questioned, and employee attrition

and recruitment a worrying internal issue, the performance of this company can be

appreciated. The main reason for the continuing positive performance of this

service-oriented organization is its breadth of expertise along a few core competencies.

Started more than twenty years ago, the core competence of this public-sector IT

organization remains its experience base with hardware systems and software development.

These competencies have led the organization to create its business units, which include

customer service, systems integration, training and education, international operations

and INDONET.

border="0" hspace="2" vspace="2" align="right">The customer service business unit

contributed the largest share-55 percent-of the total revenue in 1997-98. Out of this

large share, 29 percent came from the supply of equipment and the balance from

installation and maintenance. As the primary undertaker for supply, installation, and

maintenance of IT equipment in Government and public-sector organizations, CMC currently

has the expertise to maintain equipment from 40 different global vendors at 150 service

locations. This support capability is claimed to be one of the largest in the world. Over

the last two years, the client base for customer services has grown to include the Indian

Railways, Indian Meteorological Department, National Remote Sensing Center, Indian Oil

Corp., Defence Research Development Organization, and Indian Council of Agricultural

Research.

Amongst its other competencies is software development, with strong domain

expertise in ports, transportation, freight operations, and banking and finance. CMC

capitalizes on these competencies through its systems integration business unit. In

1997-98, the contribution from the systems integration unit to the total turnover was the

second highest, at 33 percent. In the last few years, CMC had accepted projects of varying

domain expertise, as an extension of its service conditions with government and

semi-government clients. However, project overruns due to employee attrition, multiple

points of authority in government-client organizations and limited understanding of IT

applications in these organizations have forced it to limit such new ventures. Instead, in

the next few years, CMC will concentrate on achieving revenues from its tested products in

these areas. These products include TC4, SWIFT in banking; VECTOR for stock exchanges;

MACH, CALM for freight management at ports; OASYS for the oil sector; ARTS, IMPRESS for

railways; FACTS for police; CRYSTAL for mining; and FADHS for air defence.

Amongst its major systems integration orders in 1997-98 were the freight operation

information system for the railways; central depository accounting system for the Bombay

Stock Exchange; fingerprint analysis and tracing systems for the police forces; global

positioning systems for vehicles, automation of the National Games and development of the

web-site for the Election Commission.

With the need to establish itself in the global market, CMC has attempted to penetrate

the US market through its acquired subsidiary Baton Rouge. This subsidiary has been mostly

providing banking and finance solutions to the US market. Revenue from this subsidiary

grew by 61 percent in 1997-98.

With the basis of a relatively sound global market expansion strategy, exports grew by

61 percent in 1997-98 with an increase of contribution from 15 percent in 1996-97 to 19

percent in 1997-98. Some important global projects included computerization of the

Chittagong Stock Exchange in Bangladesh; implementation of port management at Bremerhaven src="cmcltd3.jpg" width="300" height="126" alt="cmcltd3.jpg (21474 bytes)" border="0"

hspace="2" vspace="2" align="left">in Germany; and Train scheduling system for London

Underground among others.

CMC has set for itself an ambitious target of Rs 700 crore by the year 2000. Among its

immediate plans for business development is leveraging on its alliance with Baan for ERP

services in the domestic and global markets. It has also formed an alliance with Sun and

started a Java Competency Center at its R&D facility in Hyderabad. With Compuware, it

has tied up for its UNIFACE range of client server and Internet products.

A limiting factor in CMC's growth today is leadership. At present there is some dispute

over this issue and the matter is now subjudice. Unfortunately, this has jeopardized most

decision-making. Another hindrance to the company's growth stems primarily from the

81-percent stake held by the Government, which limits board management functioning,

employee salary structure and related attrition, proactive decision-making, investments,

and other long-term thinking. Nevertheless, if the recent thrust on disinvestment bears

fruit, CMC may well be on its way to becoming an IT ratna by the end of the century.