Pune Special - MNC Preference: Becoming a Global Favorite

The city of Pune not just boasts of local ventures or tier-2 IT services
companies, even MNCs have set up their primary Indian ODCs here. Starting from
biggies like Symantec and Kanbay and PTC, to mid-range companies like TIBCO as
well as smaller players like UBICS and Synechron. Dataquest explores what led a
few of these players to set up shop and how they are leveraging the advantages
the city offers to forward their overall business.

Pioneering Pune as a Viable Location

Kanbay is incorporated in the US but follows a primarily India-centric
offshore delivery model; in fact more than half its global revenues were
generated from the work done out of its centers in Pune, Hyderabad and Chennai.
And amongst these locations, the Pune ODC, by virtue of being the earliest, is
also its India HO, and therefore occupies a very important position in
Kanbay's overall scheme of things. Of Kabay's total manpower of 6,500 people
worldwide, nearly 5,000 are in India with the Pune ODC alone hosting 3,500.

'Accurum's leadership in technology solutions in the capital markets sector strengthens Kanbay's practice and adds to our breadth and depth of service for our current clients' -Cyprian D Souza, MD, Kanbay India

Like many of its peers, Kanbay's growth in recent years owes much to its
aggressive M&A strategy. In 2005, it made a $12 mn acquisition of Accurum,
an IT services provider to the capital markets industry. According to Cyprian D
Souza, MD, Kanbay India, helped the company augment its traditional strengths in
banking, credit cards and credit-related activities,' “Accurum's
leadership in technology solutions in the capital markets sector strengthens
Kanbay's practice and adds to our breadth and depth of service for our current
clients.”

In 2006, Kanbay acquired Adjoined Consulting, an Oracle and SAP solution
provider, for $165 mn, making it one of the largest acquisitions by an
Indo-centric company. “The acquisition has expanded our technological horizon.
It has helped Kanbay strengthen its presence in new technologies front, like
Netweaver (SAP) and Fusion (Oracle),” says Atul Phull, head (India Marketing),
Kanbay. The acquisition was also in sync with Kanbay plans to diversify into
offering services to the consumer and industrial products industries.

In fact, these acquisitions had forced Kanbay's hand in looking beyond Pune,
though it still remains the HO of its operations in India. The Accurum
acquisition brought into the Kanbay fold an ODC in Chennai, while following the
acquisition of Adjoined, the company invested $50 mn to set up a 3,500 seat
campus and an ERP centre of excellence at Hyderabad. It has also opened a
training center in Pune, though D Souza informs that Kanbay is now looking at
setting development centers in other regions in South Asia, or South America or
the Carribean islands. The company is also scouting at Eastern Europe to cater
to its operations in the mainland Europe.

Kanbay's independent testing services, based primarily out of the Pune
center, assure business success by providing an independent and objective view
of current test processes. Says Arindam Basu, head, Global Technology &
Testing as well as the Pune center head, “Businesses are increasing
investments in testing and quality management and relying on independent
external experts as a standard component of software projects. We recommend the
tools, technologies, and methodologies best suited to achieve business
objective-with built-in metrics demonstrating gains in efficiencies.” Having
started as a focused business only three years back, testing creditably
contributed 7% of Kanbay revenues in 2005-06 and involved 1000+ people. It is
also on the verge of acquiring another city-based testing player.

Though HSBC and Morgan Stanley accounted for 60% of the revenues, with HSBC
contributing 33%, Kanbay is looking at bringing down this dependence, informs
D' Souza. The Adjoined acquisition brought 150 new clients to the fold;
earlier Accurum had also brought in more than 25 new clients. Other than
testing, today financial services contributes 75% of Kanbay revenues while
consumer electronics accounted for 18%. The importance of Pune for Kanbay is
evident from the fact that even the client roster includes the Maharashtra Sugar
Board and the Pune and Pimpri-Chinchwad Municipal Corporations.

'We have offices in the US and the UK but primary development work is done from our center in Pune. We intend to further increase the scope by establishing another campus in the city' -Faisal Hussain, CEO, Synechron

Spreading Knowledge from Pune

The primary motive for Synechron (formerly Fusion Infotech) to have the main
Indian ODC in Pune perhaps has to do with the “sons of the soil” rationale.
This IT solutions provider focuses specifically on mortgage banking, capital
markets, insurance and 3D modeling services in the online marketing space. “We
have offices in the US and the UK but primary development work is done from our
center in Pune. We intend to further increase the scope by establishing another
campus in the city,” informs Faisal Hussain, CEO, Synechron.

The Pune IDC, over the years has been involved in handling turnkey projects
for Merrill Lynch (loan application), Bank of New York (trading platform),
Washington Mutual, New York Mortgage, Dun & Bradstreet, Mortgage Cadence,
First Residential, Wachovia Securities and Blue Cross/Blue Shield. On the 3D
modeling front, Synechron has been providing creative expertise to develop
leading brands like HP, Sony, Hitachi, Maytag and Bosch online. Now the Pune
center has also started the mortgage banking KPO division that offered five
clients leverage the services of its strategic development centre (SDC).
US-based Asurion has been signed as the first KPO client.

Synechron closed last fiscal year with revenues of $14.5 mn and is targeting
around $30 mn this year. “We are also looking at diversifying in terms of
geography. Currently, a bulk of our revenues comes from US clients, but we are
looking at Europe and Far East for expansion,” informs Hussain. To support
growth of this magnitude, the company has bought around 25 acres of land at
Hinjewadi, where it intends to establish a campus. Synechron currently occupies
fours floors in MIDC Knowledge Park in Kharadi.

Much of this large campus would be utized for the SDCs: Synechron has
received good traction for its concept of establishing SDCs for clients.
“Currently, we have two SDCs, while a third one is underway,” says Hussain.
These three SDCs primarily support 24/7 Real Media, Asurion and Mortgage
Cadence. While mortgage banking and capital markets roughly contribute a third
of Synechron revenues, insurance accounts for 20% and online media 15%.

Good Times@ Pune

Everyone knows that Vijay Mallya is the king of good times but that he is
also the CEO of an IT company is perhaps not very well known. The Indian arm of
UBICS Inc, headquartered in Pittsburgh, is located in Pune. Sunil Patil,
president, Global Solutions, UBICS, justifies the choice of Pune as UBICS'
India HQ. Logically, one would expect this to be Bangalore, India's software
hub and also UB Group's HQ. But the quality of Pune's manpower, the low
attrition rate and the proximity to the Mumbai market tilted the scale in
Pune's favor and made UBICS India another jewel in Pune's IT crown.

'Logically, one would expect UBICS' India HQ to be Bangalore, India's software hub and also UB Group's HQ. But the quality of Pune's manpower, the low attrition rate and the proximity to the Mumbai market tilted the scale in Pune's favor' -Sunil Patil, president, Global Solutions, UBICS

Primarily the Pune-based UBICS India offers three lines of services: its
product portfolio consists of Ventive, an e-recruitment solution as well as
SeeITFirst, a streaming video solution; a KPO project from a large healthcare
solutions company in US worth $1.5 mn for the current year; and, lastly a
high-end IT consulting services. While the Pune HQ is involved in all three
activities, offices in Bangalore and Delhi have been earmarked for consulting
services and e-governance projects respectively.

The e-recruitment product, Ventive, that can automate the human supply chain
in the words of Patil, has found takers like Patni, KPIT Cummins, Zensar and
Texas Instruments. The streaming video product, CITFirst, that came via
acquisition of a California company too boasts of clients like University of
Mumbai, Integrated Child Development Services, Department of Health, Government
of Maharashtra as well as an NRI Ayurved practitioner running the Ayurveda
Mahavidyalaya.

On the IT consulting front, UBICS offers services like ERP, Java or Microsoft
technologies maintenance for companies like Tech Mahindra, KPIT Cummins and
LogicaCMG. The company has also performed the entire SAP integration for UB
Group entities like the recently acquired Shaw Wallace as well as the
high-flying Kingfisher Airlines. The fact that UBICS Inc. already possessed
expertise in the food & beverage as well as airlines domains had definitely
helped. Globally, UBICS possesses F&B clients like Papa Johns and Ajina Moto
(PeopleSoft ERP implementation).

UBICS India is also proving back-office services for Kingfisher Airlines,
where its offerings include call center, fare filing, revenue accounting etc.
With 70 people involved in the back office operations currently, Patil plans to
double the headcount to 150 by the year-end. Subsequently, this expertise might
be leveraged to offer back-office services to third-party international
airlines. During 2005-06, the India operations contributed around $3 mn of
UBIC's overall revenues of $22 mn.

Rajneesh De

rajneeshd@cybermedia.co.in