Aztec acquires Pune's Disha for $12.1 m

Aztec Software and Technology Services, a listed Indian company providing a suite of software product development lifecycle services, announced that it would be acquiring Pune-based Disha Technologies, an independent software testing company. The deal is a part cash, part stock deal comprising $9.6 million in cash and $2.5 million in stock.

"We wanted to provide our customers with the missing expertise of testing in the product space. And therefore it felt like the wise decision to acquire Disha which has built expertise in that area," said V Chandrasekaran, CEO of Aztec.

Disha will function as an independent subsidiary of Aztec and according to Chandrasekaran, this is because customers prefer it that the quality head remains slightly distant from engineering, while reporting to the CEO of the organisation, thus ensuring that there is no bias.

Disha Technologies, which was formed in 1997 and has offices in Hyderabad and Pune apart from US operations, has more than 400 people on its rolls and recorded revenues of $7.8 million in the last twelve months and a cash of $2 million in its balance sheet. The company also plans to open sales offices and testing labs in Europe and North Eastern US in the next twelve months.

"When you consider the operations that product companies would be willing to outsource, testing appears as one of the more prime ones. Consider this. Microsoft has 1.7 testers for every single developer. So when a product company looks to cut cost, what would be the operation that they would outsource first? Testing is the big wave in outsourcing happening right now and it is growing at 100% every year in the country," asks Chandrasekaran.

As per Aztec, the global market size for testing software stood at $6 billion of which $3 billion was outsourced and $600 million trickled into India.

Disha Technologies, which was formed in 1997 and has offices in Hyderabad and Pune apart from US operations and has more than 400 people on its rolls and recorded revenues of $7.8 million in the last twelve months and a cash of $2 million in its balance sheet. The company also plans to open sales offices and testing labs in Europe and North Eastern US in the next twelve months.

When asked about expansion into software testing for IT service companies, Chandrasekaran told Business Standard, "As far as the segment of IT services goes, we would prefer to work through channel partners rather than go directly to customers. It works better for us to invest in the reach of our partners and provide our expertise from the back-end."

He added that now that the acquisition has come through, there is nothing that stops Disha from acquiring telecom testing or mobility testing expertise in the future thus expanding the services base.

"When you are a small company it is necessary that you have a focus to make a difference and compete against bigger players in the field. That is what we bring to our customers and that is why they choose us above the bigger, more vast service oriented players," he said.

Replying to a query on further acquisitions, Chandrasekaran said that they would look at further acquisitions in time, as and when they feel they have to add on a service or when customer requirements evolve. Aztec recorded revenues of $9 million last fiscal and closed last quarter at close to $2.3 million.