Q&A: B Sumant, Managing Director, ITC Infotech

'Being part of ITC is a key differentiator for us'

ITC Infotech, a wholly-owned subsidiary of the tobacco-to-hotels conglomerate ITC Group, recently completed 10 years of operations. With strong financial backing of the parent, it is now aspiring to be a billion-dollar company, from the presently estimated $125-130 million revenue and is looking at inorganic growth opportunities. B Sumant, managing director, talks to Bibhu Ranjan Mishra on the next phase of growth. Some excerpts: 

Does it help being a part of a diverse group like ITC?
We see ITC as a huge area of strength for us and also as a differentiator from other IT companies. ITC as a company is into FMCG (fast moving consumer goods) products, paperboard, packaging, branded apparel, lifestyle, etc. We are the second largest hotel chain in the country. We are into agri-business, as part of which we procure a large amount of agri products at the farm level. These industries we understand completely.

So, whether it is travel, hospitality, CPG (consumer packaged goods) or manufacturing, we are able to take the best practices from our core businesses and convert these into IT solutions. Also, when we interact with clients, we bring in domain experts and practicing managers from these businesses to interact.

Does ITC give you any preference for their internal IT contracts?
Yes. But we have to bid for it and win. However, in most of the internal IT works, ITC Infotech participates in an assisting role, as we provide support, maintenance and enhancement services, post-implementation.

Is a public listing plan there down the line?
That is a decision ITC has to take. It's their call.

We are seeing companies touching $1 billion in revenues in their 12th year. You have already completed 10 years.

Our own ambition is to become a billion-dollar company and we are working towards that. We are looking at both organic and inorganic growth. We believe you cannot organically grow and reach $1 billion at a great speed. We are now aggressively looking to grow through the inorganic route. That is the only way we can scale up in a short time frame.

Any particular geography or space you are looking at?
In our opinion, acquisitions make sense under three circumstances. If the company we are looking at has got IP (Internet Protocol) or products we can took to for our existing customers; if they have got marquee clients to whom we can sell additional lines of services; if the valuation of the company is very attractive. We are looking at companies in Europe in infrastructure services and the US in SAP (software applications) and product lifecycle management.

What is your organic growth strategy?
We work regularly with consultants to identify areas and fine-tune our offerings. We look at infrastructure services, Siebel, loyalty, PLM (product lifecycle management) and testing (across the board) as the current engines of growth. We are also foraying into newer areas like life sciences, healthcare and eGovernance. In India, we are actively bidding for all the large eGovernance projects.

You are going quite aggressive on hiring - plan to add 1,800 people by March?
Right now, we are over 4,000 people. We have been adding at a good rate, in line with the business growth. Our business has been growing fairly strongly. The whole industry was in a slump last year. I personally believe this (aggressive hiring) is a correction. Next year may not be as strong as this year, as a lot of projects on hold have started getting released. There is a sudden spike in demand, which will settle into a steady pattern.

You have fairly good exposure in Europe and most European economies are not yet out of trouble.
About 55 per cent of our revenues come from Europe and about 30-35 per cent from the US. This ratio has changed over a period of time, as the US is growing rapidly. We are seeing substantially more growth in the US market than in Europe. Europe is also growing but growth has been neutralised to quite an extent because of the devaluation of the euro and the pound.

How does the current fiscal look in terms of growth?
This year, we have already added 46 clients. In 2008-09, we added 36 clients and last year, we added 62. This year, we hope to beat last year's figure, as three more months are left.

How big are those contracts?
They are certainly big. We measure our revenues on multiple parameters. We look at the quality of the revenue stream by seeing if the deal sizes are improving; if we are getting bigger clients and the deals are one-off or an annuity; are they fixed price or time and material. On all these metrics, we are seeing an improvement.