The Hindu Business Line : `Change management has always been a focus for us'

Chennai June 9 Mergers and acquisitions are part and parcel of business cycles within any industry, but in the long run, only those companies that have built a sustainable business model will survive, according to Mr Amar Chintopanth, Executive Director and CFO of 3i Infotech.

Speaking to Business Line on managing inorganic growth, he said that when an industry booms, the natural progression is for several players to enter the market with the product or service that is in demand. "This principle applies to almost any industry and the IT/ IT services industry is no exception."

Growth strategy

3i Infotech has adopted the strategy of scaling up through a mix of organic and inorganic growth. This strategy has been driven primarily "to fill perceived gaps in our suite of offerings as well as to make inroads into newer markets," Mr Chintopanth said.

"Over the years, we have acquired several companies and successfully and seamlessly integrated them into our business. There have never been any issues with quality of delivery being impacted."

One of the biggest challenges that inorganic growth poses is that of change management, retaining top talent and ensuring cultural fit.

Cultural, technological and business integration remain a concern for any company on the acquisition path.

"Change management has always been a focus for us. However, we also ensure that we acquire companies that have synergies with our own business in all these aspects in order to hedge the impact of these issues."

As a result, he added, a majority of the senior management of acquired companies has remained with 3i Infotech, heading various business units.

How does 3i Infotech zero in on a company for acquisition?

"Our buys are focused on enlarging our offerings to target segments both in terms of products and services, or entering a new segment," said Mr Chintopanth.

Besides, the company takes this route to fill the gaps in offerings within existing verticals that it services.

"A potential acquisition target needs to meet at least one of these parameters. Of course, the standard rules apply - i.e., it needs to be financially stable, have a robust product offering and actually allow us to enhance the value we provide to our customers."

Services offered

3i Infotech offers a range of software and IT solutions, including applications for BFSI, manufacturing, contracting and retail and distribution verticals.

In addition, it offers a broad range of software services, security consulting and specialised services such as product re-engineering and e-governance.

On whether the company isn't running the risk of spreading itself too thin, Mr Chintopanth said: "We believe in providing customers with a one-stop-shop option for any IT requirement they may have - from ERP applications to managing IT infrastructure, we want to be able to provide every option so that they can pick whatever is optimal."

Mr Chintopanth pointed out that for 3i, the managed services, e-governance and BPO businesses are "not exclusive to our products business. In fact they are complementary and allow us to optimise resources within the company as well."

Despite being an IT company, 3i is not worried about the strengthening rupee, as only about 28 per cent of its business is dependent on the dollar. "Therefore, there is little or no impact on our business. The domestic market has always been a focus for us. We will not look to reduce our play in the dollar markets based purely on the strengthening of the rupee."

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