The Hindu Business Line : Zensar bets big on migration services

ZENSAR Technologies, the Pune-based software services company, is betting heavily on migration services as a significant revenue growth opportunity over the next few years.

Speaking to Business Line, Mr Ganesh Natarajan, Vice- Chairman and Managing Director, Zensar Technologies said, "Over the next three years, our migration (revenues) will definitely grow by over 100 per cent, from $7 million to $15 million next year to $30 million in the following year, while our core Enterprise applications and management will grow by 25-28 per cent".

Migration services typically involve shift of legacy systems (or mainframes) and applications built using Cobol and other older technologies to open systems and Web-based environment in order to reduce maintenance costs.

Outlining the significant migration opportunity, Mr Natarajan added, "On a very conservative estimate, migration opportunities for us, in Japan alone, are $150-200 million in the next three years. There is a demographic problem in Japan, where most mainframe programmers will be retiring by 2007-08."

In order to capitalise on these opportunities, Zensar already has partnerships with companies such as NEC and Fujitsu. But he admitted that the opportunity in Japan is limited by how fast Zensar can ramp up.

There are two challenges, one is to get the mainframe employees and another is to get Japanese-speaking domain experts. Moreover, opportunities also exist in the US and UK, where quite a few financial services and retail companies also have similar migration plans.

The confidence of Zensar stems from Solution BluePrint, a software framework developed by the company that automates a substantial portion of the coding typically done by programmers.

Reinforcing this point, Mr Natarajan said, "The current thinking is that it costs $6 per line of code to migrate really very old mainframes. But, today we are delivering at $1.27 per line of code, because of lower costs, faster time-to-market and fewer errors as forward engineering is automated. We have 150 employees working on migration today, compared to 40 people six months ago and will be 300 strong soon, despite the fact that migration is largely automated."

Responding to a possible SAP acquisition that has been in the Zensar radar for several months now, he added, "In SAP, we are looking for a company that has 3 or 4 good clients, which are scaleable offshore. Though there are hundreds of bodyshops in the US, we want to stay focused on what we do well and that is offshore. In SAP, we want to start with offshore support and migration-kind of services. We are looking at $10 million kind of company, but have not found the right company yet.

"Asked whether an acquisition in the financial services vertical was still in the reckoning, Mr Natarajan confirmed that they were still exploring this option.

"In financial services, since we are late entrant, we are looking for companies with two or three bulge bracket investment firms or insurance clients. We are not desperate for an acquisition. We will do it if we find the right company, this year or next year," he added.

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