'Netsol was my passion then and it continues to be my passion now'

IBM's acquisition of Bangalore-based Network Solutions last year was big
news and there were apprehensions that ran rife in the market as to what would
happen to the future of one of the biggest and most successful solution
providers in the business. But Sudhir Sharma says that his company's
acquisition by IBM was a well-planned move and indicates that post-acquisition,
Netsol still works and operates like before. He also feels that many early
apprehensions of the exercise have ceased to exist now. He is now happy that the
company has retained all of its customers post-acquisition.

What would you say is the status of Netsol as a company post the IBM
acquisition? Have there been any drastic changes in the way the company's
operations are run now?

Post-acquisition, Netsol is a 100% subsidiary of IBM. We are a part of IBM
India and in fact the acquisition was done keeping in mind the Indian market
needs. As regards the running of the company, we have not seen any dramatic
changes in the way we operate now as compared to the way we did before.

Yes, we are an IBM company, but we still have a lot of independence and are
running our operations just like before. In fact, even after our acquisition we
have not lost any of our earlier customers. Manpower retention within Netsol is
also a lot better now.

You have indicated that manpower retention is better now. Does that mean
attrition has reduced considerably?

When one talks of attrition, we could segregate employees into two
groups-those who are here for less than two years, and those who are here for
longer. Invariably people who are here for less than two years continue to move
out. That is also because they are not here to make a career.

The other group of people who are with us for longer than two years, are the
ones that make a big difference. I must say that attrition in this group has
reduced considerably post acquisition.

Lets us face it; whether it is Netsol or any other company, attrition
continues to happen. We are therefore not looking at any dramatic change in that
scenario, but I can certainly say that there has been a considerable reduction
now.

Given that attrition has reduced, have employee expectations increased?
Also since you are an IBM company, do employees look forward to better pay
packets?

Actually, yes. Employee expectations have indeed gone up. The IBM factor
prompts them to believe that they can look forward to much higher salaries. But
the reality is that while people's expectation have gone up, business has not
dramatically increased.

We are therefore trying to communicate to our employees that salary is not
the only important factor. We are now a global company and people here can look
forward to opportunities of working overseas and also get to learn a lot. We are
trying to communicate this in the best possible way to our employees and I must
admit that this is a huge challenge for us.

Besides manpower retention, what other benefits has Netsol got post this
acquisition?

Let me start by saying that our single-point focus during the entire
acquisition exercise was to retain our existing customers. Having attained that
now, we have also realized that a number of customer accounts of IBM and Netsol
are actually complementary to each other. We see very little overlap.

What this means is that there is a huge opportunity for us in terms of
business and targeting new customers. Another advantage that Netsol has got
post-acquisition is that we are part of a global company. We now have the
capability of being able to support a number of other Indian companies who would
want to begin operations outside of India. We have access to global clients and
we could help Indian companies to set up operations across different geographies
of the world.

How will you take advantage of the new business opportunities available to
you now?

While the opportunity to do business and grow is huge, the infrastructure
cost, as well as people costs, have increased. So companies, ours included, need
to focus on developing intellectual property tools that can be scaled up easily.
In order to build these tools a lot of money is needed. Being associated with
IBM places us in a good position to do that.

The need of the hour today is to work on asset-led models where tools as well
as IPR can be provided as a service to customers. There are not many players who
are working with this model. So we have a big differentiating factor that we can
offer to our customers. Being associated with IBM, we would be able to do it
better.

What is your agenda for 2006? Would you be focusing more on the Indian or
the global market?

We would still continue to focus on the Indian market, as we are not very
concerned about global growth now. Given that we are a global company, many of
our people would get enough opportunities to work overseas.

We want to go slow in the first year, understand things, and then see how
best to change our strategies. We still have to make our space and synergy with
IBM work so as to benefit both of us.

This fiscal, we would increase our focus on the service business and grow in
that space. We have already invested in IPR and tools required for that and need
to strategize on how best we can take them to market.

Using the strengths of both IBM and Netsol, we would be looking to grow
faster than the market and the next six to eight months would be very important
for us. We would also continue to build on our customer relationship and
therefore have the best of both worlds-business and people-with us.

Usually we see that the promoter of an acquisition quits the place after
the exercise is complete. Are you also contemplating a similar move?

Actually this is one of the questions I am most frequently asked. Let me
explain it in detail. Most people start a company, build it, then acquire
another and then restart again.

Unlike most of these I am not a typical businessman. Netsol was my passion
then and it continues to be my passion now. Even today when I come to work, I
feel the same as I did before the IBM factor came in. So at this point in time I
am not looking at moving out. Should any such situation arise in future, I will
probably think over it.

Asim Raina and Subbalakshmi BM

mail@dqindia.com