Sasken Communication Technologies, the telecom solutions provider, was perhaps one of the few Indian technology firms which got severely impacted due to the global downturn. The company saw key clients like Nortel filing for bankruptcy and Motorola changing business strategy, which impacted its top line. The chairman and CEO, Rajiv C Mody, discusses the past and the road ahead with Pradeesh Chandran. Edited excerpts:
The past couple of years had been very challenging for Sasken. Have you emerged from that?
There was some turmoil due to change in technology, change in certain customer profiles and certain markets. We have positioned ourselves stronger than before and are now on the path of recovery. We have also taken some strategic measures this year, particularly in the network equipment business. We have decided to exit some of those businesses, dominated by Chinese players. We have forayed into adjacent ones like automotive, satellite communication and consumer electronics. We are seeing a huge demand for our services, as lots of works are moving towards low-cost location.
What major challenges impacted your growth?
Taming attrition was a major challenge for us and recession also had an impact on our business. Some of our customers reduced and withdrew their budgets, which impacted us. Some accounts saw variations due to change in technology. Nortel, one of our major customers, which was contributing 8-10 per cent of our revenue, filed for bankruptcy last year. Some its assets were sold and acquired by companies like Avaya, who are also one of our clients. However, the revenue contribution from that (Nortel) account has gone down.
You also had a tough time in handling attrition?
We have focused quite strongly on driving internal competency, with an aim of aligning ourselves to face the challenges. We have converted part of our compensation into variables and ensured that all of us understand the situation. Our employees are now confident about the variable pay. Over the last five pay periods, we have paid more to employees. The whole idea was to drive a performance culture and to bring better accountability.
Sasken had a dismal FY10, when the revenue went down by 17 per cent to Rs 574.2 crore. How does the ongoing year look?
Our revenue in FY10 got impacted, as some of our customers ramped down some programmes due to the financial turmoil and other issues. The major reason was Motorola's decision to exit from symbian phones. Besides, Nortel's bankruptcy filing last year also impacted our growth. We added 12 new customers in the last quarter, which took the total of active customers to 116. We see a bright future ahead.
How is your satellite phone business doing?
Our recently launched sat phone, Isatphone Pro, is getting a good response in the market. Through this, we have demonstrated that we can deliver an end-to-end complex device like a satellite phone to anybody. Inmarsat, which provides mobile satellite communications services, has launched satellite phones based on our platform, and they are seeing good demand for this device.
What is the status of the joint venture you had with the Tatas, after they withdrew from it last year?
We invested in two companies — one is ConnectM, focused on machine-to-machine communication space, and the other was TACO Sasken, a joint venture with Tata. TACO Sasken was to focus on automotive electronics products in the areas of telematics, infotainment and occupant convenience. Tata changed their strategy and we didn't have the capacity to enter a business to sell automotive parts directly. The investment has been written off.
You also invest in technology companies in the start-up phase. Any plan to raise funds for it?
We have invested in a fund run by Arun Nethravali, president of Bell Labs, and I am sure their portfolio companies are doing well. We continue to invest in start-ups which bring more value for our customers and we ensure return on investment. We are not planning to raise funds. In fact, we are in the process of buying back up to 10 per cent of our shares from the market for about Rs 34 crore.