AppLabs Technologies in talks to buy US firm

Company to up Hyd centre headcount to 600 from 400

Philadelphia-based AppLabs Technologies Private Limited, a software testing, quality assurance and software development services company, is all set to step up its presence in the US through an acquisition.

The Rs 45-crore company, which has its global technology centre based in Hyderabad, is at present in talks with three major companies in Philadelphia and has earmarked between Rs 35 and Rs 45 crore for the acquisition.

Reluctant to reveal the name of the US firm which AppLabs is going to acquire, Sashi Reddi, founder and chief executive officer of AppLabs told Business Standard: "Negotiations are going on with three major companies in Philadelphia. The acquisition, which would cost us between Rs 35 and Rs 45 crore on a half-cash and half-stock basis, would be complete in the next three months."

According to Sashi Reddi, once the acquisition is complete, AppLabs, which is at present among the three leading software testing companies in India, would make it to the top 10 list in the world.

"We are the acknowledged market leader when it comes to serving software product companies worldwide. After the acquisition, we expect our revenues to reach the Rs 100-crore mark this fiscal. We also see tremendous opportunities for growth and are expecting a 60 per cent growth next year," Sashi Reddi said.

The six-year-old company is also planning to ramp up its headcount this fiscal.

"After the acquisition, our average team size for a customer will increase by around 50 per cent. At present, we engage a seven to eight-member team for a customer on an average. We are now planning to increase our headcount to 600 from the existing 400 at our global technology centre in Hyderabad. We will also be increasing the headcount at our US office from the existing 20 to 100 this fiscal," he said.

On the company's clientele-base, Sashi Reddi said that the company at present has 30 active customers with another 50 customers who assign work on an as-needed-basis.

AppLabs' customers in the software testing market include leading technology companies in the world such as SAP, InstallShield and Black board.

The company, which received an ISO:9001/2000 certification from TUV Management Service, Germany in 2002, is a Microsoft Gold Certified partner. The company has recently developed a security software for Comcast, a leading cable company in the US. The software is now being used by 10 million customers.

To reinforce its commitment to the e-learning space, AppLabs has launched a separate e-learning vertical in addition to the life sciences and healthcare, financial services and technology verticals offered by the company. At present, the company has six e-learning customers in the US.

"Performing quality assurance in e-learning is a unique challenge given the intermingling of technology an content needs of customers. We intend to expand our role as the market leader in the e-learning space by building on the success we have experienced in the last few years," Sashi Reddi said.