The Hindu Business Line : ‘India not popular for top-notch product work yet’

Bangalore, Aug. 16 As the Hyderabad-based Megasoft waits to complete its acquisition of US telecom firm Boston Communications Group Inc (BCGI), Business Line spoke to its CEO and Managing Director Mr G.V. Kumar on competition from g iants such as Ericsson, Motorola, Nokia Siemens and how Indian firms are faring in the global telecom arena.

Megasoft’s Xius brand of telecom operations support system solutions are used by operators and virtual network enablers (third party telecom infrastructure — towers and antennae providers) across the globe. It also has an IT services division called BlueAlly which does work in product lifecycle management, application development and maintenance for telecom, information security and insurance firms.

How does a small Indian telecom firm get noticed into the big ocean of global telecom industry?

It is definitely our biggest challenge as a company. India is currently known just for its IT services and not for high-end, top-notch product work yet. Most turn to certified and popular countries such as the US and Europe for products. They are used to buying from Ericssons and Nortels. Associating with HP and Teleglobe has helped. We have literally had to buy credibility to get a foot in through the door.

Is that the reason behind the $65-million BCGI acquisition?

Yes, we wanted to enter the US and Latin American markets. Boston Communications Group Inc is a well-known provider of prepaid services and unregistered roaming services. It has 21 clients in North America.

To beat the competition, what is your USP (unique selling point) in telecom?

We offer low-cost hardware that run on Linux operating systems. These are built for start-up telecom operators, who need economical solutions.

What changes have the rising value of the rupee compared to the dollar resulted in your company’s strategy?

We have both products and services arms. Telecom products division contributes Rs 24.5 crore, while the IT services division contributes Rs 36 crore to our revenues. We are now slowly shifting focus onto research and product development. IT services are getting hammered by the rupee appreciation. We are tilting towards telecom as margins for products are higher. At present, 84 per cent of the company’s profit is from the telecom arm. Once we acquire BCGI, telecom will contribute to 70 per cent of our business.

What’s next?

We will continue to acquire firms as we consolidate. We are now looking at European telecom firms, sized between $40 million and $80 million. We are also building a new campus covering two lakh sq. ft in Hyderabad.