The New Globetrotters

Following the footsteps of large system integrators like TCS, HCL, Wipro, Infosys and the likes, the mid-sized solution providers (SPs) in India have also started making their presence felt in the overseas market. Today, an increasing number of these SPs are readying aggressive plans for expansion in international markets. Though the Indian market offers ample opportunities to these SPs to grow, they need to look outward to maintain the growth rate and profitability, that they have achieved in the domestic market. Some of the industry experts also believe that the margins in the in-country business are shrinking and the value of services is highly undermined in India; and in order to increase their profitability, they have decided to expand their global footprint. For instance, Aditi Technologies has an aggressive roadmap for this year and is expanding in different geographies, which will give the company an advantage to remain closer to its customers. Most of its customers have a global presence and as a holistic partner, the company wants to be everywhere, where its clients are. The expanded geographic reach will also give Aditi Technologies an opportunity to address the needs of newer markets.

Another company with burgeoning global aspirations is Omnitech Infosolutions. As an IT service provider based out of India, it has an advantage in terms of cost of delivery and quality of service, as compared to the local SPs. The company also has an ISO certification, which adds value to its services in the global market. Omnitechs entire rationale of expanding its presence globally is to further enhance the companys organic revenue contribution.

Rajesh Bakshi, CEO of Netlink Business System says, companies that are going global have been around, for the last five to 10 years in business. They have made their own skill-sets not only in re-selling, but also in offering complete IT solutions. Earlier, these SIs had nothing to offer from their own pocket/brand, as they were a part of a larger brand. But the moment they became a mid-sized company, they started making their own solutions and creating expertise around IT deployment. And at this very moment, they also realized that along with the Indian market, they need to look at the international market as well. Today, these SPs are more into the Far East, Middle East, and African markets.

Business Opportunities

These mid-sized Indian solution providers see a plethora of business opportunities for themselves in the overseas market. They see a lot of system and network integration market specially in places like Africa, Middle East, and South America. For example, Sai Infosystems, one of the leading SPs in the country, has worked on almost all platforms and technologies in India. Besides, it is very competitive as far as costs are concerned. The company sees a number of opportunities in emerging economies, to leverage these advantages and make its presence felt. It is still a baby step. We have formed a 100% subsidiary in UAE for taking care of our overseas business. In the current financial year, we have executed orders worth `15 crore and orders worth `12 crore are still in the execution stage. We have also received certain software development contracts, says Sunil Kakkad, CEO of Sai Infosystems.

Vineet Kumar Arora, MD of Aditi Technologies points out that off-shoring and on-site consulting presents a big opportunity for the company in the overseas market, which drives the strategy to expand across the globe. Ninety percent of the companys revenue comes from overseas business as of today and the business is growing at a very healthy rate compared to the industry average. In the last couple of quarters, it has witnessed a spurt in orders.

Before we went to the US market, we found, that our larger competitors were making huge profits and minting money. There were huge opportunities for software development companies, as the market was quite mature there. That was when we decided to go global as well. The demand generation, that takes place in these mature markets is very huge and possibilities of acquiring customers is also very high. In two years time, we have doubled our revenue, says Nitin Shah, MD, Allied Digital Services.

Another aspiring company, QuantM Net Technologies, is focusing on a few selective areas of opportunities. Its focus is on global organizations looking to set up offices in India, as it has seen success in offering them ITaaS model to deliver the IT infrastructure in a painless and expandable model, saving them from large upfront investment. The company also offers Business Continuity and Operations Recovery (BCORP) services outside India for Indian clients and in India for global clients.

There is a tremendous potential in the banking and finance verticals, as solutions related to payment in the banking sector are the most lucrative opportunity currently. The region, which will capitalize most will be the Asia Pacific region. Infrastructure management and application management solutions compiled with performance management services is another opportunity in the Europe and the US markets, says Atul Hemani, MD of Omnitech InfoSolutions. He adds that 27% of the companys sales come from the overseas market.

Devendra Taneja, CEO of PC Solutions says, Our objective of going for projects outside the Indian geography was multifoldexplore and set observations to lesser competitive and growing market, get benefit of currency multiplier for the similar work, and test and expand competencies, practices and processes. So far, we have executed projects in more than 25 countries mostly from developing markets of Africa and Latin America. In the current financial year, our total service revenue from these geographies is all set to exceed `1 crore.

Strategies Being Adopted

The Indian SPs are following both reactive and proactive approach to enter into new geographies. These companies are continuously exploring various opportunities in different parts of the globe and would enter into a particular geography if they see a justified business sense. QuantM has an extensive relationship and network with the Global OEMs and ISVs such as IBM, HP, SUN, Microsoft, Cisco, VMware etc in India. This can give us a a head-start when we enter new markets as most of these OEMs have international partner programs, to support aspiring partners like us, to go global. We intend to leverage our relationship with OEMs globally, which will enable us to execute with excellence across a flexible, scalable global system, that will help in delivering superior operational performance and optimal results for customers, at any of our global locations and will fulfill their requirements, says Pawan Khurana, CEO of QuantM Net Technologies.

In order to make a global presence, acquisitions and local partnerships are an integral part of any companys strategy and that is where these SPs are also focusing. They believe, that the acquisitions would help them with capacity building and give them a ready client base along with off-shoring and cross-selling opportunity to the target company customers. Besides, acquisitions can generate cost efficiency through economies of scale, enhance the revenue through gain in marketshare, and even generate tax gains.

Col Balwinder Singh, MD, Targus Technologies says, Since we do not have operational and sales offices in many countries, we need to leverage on existing integrators and consultants in the aforesaid countries. We have also formed a new business unit called IBG (International Business Group) through which we are aggressively hiring new talent. Also, the IBG sales force is traveling across the world, to generate new business and partnerships. As far as local partnerships are concerned, while entering an overseas market, it is important for the SPs, to identify opportunities and strategies that will work along with choosing the right markets and companies, to collaborate and compete with. This makes it easier to market in foreign markets because by working with the local firms, companies gain crucial knowledge regarding the customers and their relationships. Also, working with foreign companies would give an insight into the local economy and help the SPs decide, whether to continue investing or not depending upon where the economy is headed in the future.

Moreover, the convenience of acquiring a foreign firm, which includes pre-existing relationships with suppliers and customers, the expertise of existing personnel, and obvious familiarity with the local market are advantageous to the entire system.

The main idea behind going global is to expand and grow the business, whereby entering new geographies will get you new customers. Besides, the acceptance level of your services is high in mature markets like the US. If your product portfolio is strong enough, it is not necessary to enter into partnerships with local players. However, if the need arises, we are open for it, says Ranjan Chopra, CEO, Team Computers.

Sashi Reddi, Founder, Chairman, and CEO, AppLabs says, Since our customers are global, we need to be global as well, growing beyond the US and the UK. We are exploring our delivery centers around the world, so that we can be closer to where our customers do business. We are currently over 2,500 people spread across India, the US, and the UK. Our plans are to continue to develop deep domain knowledge in all the verticals we operate in, so that we can understand the business challenges of our customers and drive value through our services.

Challenges In The Overseas Market

Some of the common challenges faced by an Indian SP in the overseas market include establishing a brand and building reference-ability in a new market. The other challenge is aligning the companys work culture with the local culture. Indifferent customer expectations, cultural differences leading to biased view about a solution provider, manpower availability, local language, and above all the entire ecosystem are some of the other challenges faced by the SPs. Besides, the organizational structure, technology differences, warranty support, on-site services, lack of familiarity with the local geography and the local partnership with the IT vendors tend to be great obstacles to overcome. The issues arise when the local government has a bias towards local players or it becomes compulsory to tie-up with local players to get an entry in to this space.

The Road Ahead

Aditi Technologies believes that the Asia Pacific market is growing rapidly and it will certainly expand its business wherever the need arises. On the other hand, QuantM is planning to forge strategic partnerships with application vendors and local IT services companies. It is also looking for strategic alliances, which will add value to its business and complement the partnership for growth. Targus Technologies is planning to generate an annual business of $5 mn by the end of the next fiscal year and is also looking to provide RIM (Remote Infrastructure Management) services. It might also look for strategic partners, who will invest capital, and provide the company with a wider access to global markets, and bring in management and technology expertise.

Sai Infosystems intends to expand in South-East Asia, the African Sub-continent, and some of the European countries in the near future. It is also open to all partnerships, which can bring expertise in emerging technologies on board and can help the company in leveraging its existing relationships with customers in serving them better, as well as to expand quickly in new markets. Moving further, Omnitech is planning acquisitions in the European and the US markets worth $15 mn and $20 mn respectively.

Nivedan Prakash /DQ Channels

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