The Hindu Business Line : ‘Quintegra targets $1 b revenue in 3-5 years’

Asked how the company managed to achieve a ten-fold increase in revenues, he said, “we are not trying to hit the overcrowded US market. Further, the need has come for the IT industry to shift project-driven development to product-driven growth to increase profits even in the domestic market.”

The company has offices in the US, the UK, Germany, Africa, Malaysia, India and Singapore with development centres in India, Singapore and Malaysia. It delivers the full range of application management, testing, enterprise solutions, business process consulting, enterprise application integration and staffing services.

Mr Kant became part of the new management team that assumed office two months back. “We have since restructured our practices and evolved a product development plan,” he said. Reiterating the need for the Indian IT industry to go beyond providing back office support and service to product development, he said, “We are one of the very few companies to offer operations-as-a-service (OaaS) by integrating operations and IT in a common shared services framework. Rather than being opportunistic, we look upon products as investment in the chosen industry vertical, be it logistics, education, healthcare, BFSI, testing infrastructure or SAP.”

Excerpts from an interview:

Has the appreciating rupee vis-À-vis the dollar affected your earnings?

Quintegra’s exposure and risk is mitigated by the fact that we have penetration into different countries apart from the US and our growth in those countries is extremely high. In certain cases, we have re-negotiated with clients based on value-added services. However, in all contracts, a rate rise due to inflation is built in. Being product centric, we are not so project focussed where there is competition in the man-hour rate. In case of products, we can change the rates to hedge for dollar rate fluctuation and we can change the geographical emphasis. We have no long term contracts and for most of our US dollar revenue clients, our expenses are also in US dollars.

What are your target markets?

IT requirements in India seem to be pretty high. Our growth in the India market is witnessing a 40 per cent increase year-on-year. Earlier, it was a price-sensitive market, but now, customers are willing to pay for reliability and operational efficiency. We are also focussed on the high volume, lower margin market by providing a software-as-a-service (SaaS) model which will help penetrate the fragmented market at a lower cost. We are eyeing the market potential in developing countries such as Africa and Middle East, Malaysia, Vietnam and Brunei. Simultaneously, we are also focussing on Australia and Europe. We will maintain our current run rate in the US, but spread our reach as a de-risking strategy.

How will you handle markets where IT penetration is low?

IT penetration can mean either infrastructure set up or ability of the users to run the applications. We have a well evolved country strategy for both situations. There is a direct correlation between infrastructure and the stability of a country and we have focussed only on stable countries that have good infrastructure. In most cases, we offer the SaaS model, wherein in we team with hardware vendors to get penetration and who get revenues by providing the infrastructure.

What are Quintegra’s growth plans?

Quintegra has grown from $10 million to $100 million in the last 3 years. We are aiming to reach the $1 billion-mark in revenue within the next three-five years. We are already verticalised to create replicable sub-organisations. We have imported a strong second line of management with proven experience to manage operational scale.

How will you fuel this growth?

We have focussed on certain verticals such as healthcare, education and logistics. We have products and functional capabilities in these verticals. In horizontal services, we are focussing on SAP and testing by creating products and templates underlining our functional and rapid deployment capabilities.

Do you plan to increase Quintegra’s team size as you move forward?

Since we have a mix of service offerings, projects, products, production support, SaaS and shared operations, it is difficult to predict the number of people. Our intent is to maximise the return on these portfolios of offering while mitigating the market and geographical risks. We believe the strength would be around 20,000. Currently, our strength is about 1,000.

Are you looking for any acquisitions to supplement this growth?

Yes, but the focus is ‘on strategic fit rather than size’. We have a huge checklist and are not geared towards cost of acquisition, but cost of business fit. Most cheap acquisitions become expensive if integration cannot be done to realise the proposed strategic fit. So our focus is on those companies that complement our existing capability and those that would be easy to integrate.