'We aim to go public in early 2005'

As service and product outsourcing becomes commonplace, new organizational

forms are emerging to facilitate these relationships. With its three facilities

based out of India, the US-based R Systems is embarking on an expansion plan

that involves space as well as manpower. This expansion for the company is

fuelled by its recent success in terms of acquiring new customers and a

staggering BPO initiative. Zia Askari of CyberMedia News Service spoke to R

Systems’ COO Ralph Kenney about the company’s plans for India and the

global` outsourcing scenario in general.

What is the focal point of activities for India?



We are aiming for a public offering in the Indian market. The Indian market

is booming with good IPOs coming up almost every month and we are watching the

market very closely. We are looking forward for a big IPO in



early 2005.

What

are the company’s expansion plans?



Over the past two years or so, we have had tremendous growth in terms of new

customers and that’s driving us to go beyond our existing infrastructure. As

of now, we have three facilities in India–our development center at Noida, the

facility at Pune, which became a part of R Systems as a result of an acquisition

of Indus Software, and a center at Chennai. At present, we have 750 people

working with us but we want to touch the 1,000 mark as soon as possible. At

Noida, we are in the process of identifying a new facility to double the size of

our operations there. Even at Pune and Chennai, it’s time to look for

expansion in terms of space.

How are you planning to fund your investments?



Though we have more than $2.5 million in our balance sheet, we will like to

keep that money with us. The expansion will take an investment of close to $1

million and we are keeping our options open to get the investment.

What are the different business lines for the company within India?



The day we decided to increase our focus on offshore projects, India became

the center of gravity for the company. Our Noida center acts as a development

center for the company. Primarily, we are engaged in offshore software

development work for different US-based independent software vendors (ISVs). As

of now, we are executing projects for two of the top-most ISVs in the US. We

have a center of excellence for Lotus Notes based at Chennai with 60 people and

our third facility is based at Pune where we focus on our software product in

consumer finance space. This facility became part of R Systems as a result of a

$15 million acquisition of Indus Software. This deal gave us an entry into

software for the banking and finance industry, where Indus had a long list of

clients.

How do you see the BPO activity growing within the company? What are the

areas that you are focusing on?



Just at the beginning of this year, we decided to go for the BPO activity

and have dedicated about 110 people for that. However, looking at the tremendous

response, we are looking forward to increasing this number to more than 200

seats. Our BPO activities are primarily related to providing help desk support

for ISVs and also in the medical billing space. Our BPO activity was started

with an initial investment of close to $1 million and we have already broken

even.

There has been an outsourcing outcry against India and China in the US,

what do you have to say about it?



Some years ago, the Indian and the US markets were pretty isolated, but as

the IT industry matured to a certain level, small bridges developed between the

two economies. A lot of Indians moved to the US to work there and they developed

relationships with the US-based firms. Now, there is a large pool of people from

India who have a fair amount of knowledge about various market dynamics in the

US. So outsourcing will continue to take place in a big way as there is a

pressure on the high-level management there to cut down on the costs.

ZIA ASKARI/CNS in New Delhi