The Hindu Business Line : Polaris eyes tier-II banks to expand product reach

Chennai, April 27 Polaris Software Labs plans to focus on tier–II banks this fiscal to improve margins. “The tier-I story is established. We would now like to look at tier-II,” said Mr Arun Jain, Chief Executive Officer of the company, in a conference call with analysts.

There are 1,000 tier–II banks in the world and the company plans to look at this pool for new clients, he explained.“These banks are more secure than large banks when it comes to issues like sub-prime crisis,” he said. Working for them would mean Polaris would avoid being hit by the sub-prime crisis and associated risks.

Currently, 10 of the top 20 large banks in the world, each with IT assets worth $5-10 billion, use Polaris’ Intellect banking suite of products. The company expects the product, which contributed 19.6 per cent to revenues for 2007-08, to make leeway into the tier-II segment this fiscal. “More and more product implementation will hold up our margins,” Mr Jain said.

Deal pipeline

However, Polaris is seeing delays in implementation of smaller size deals. “Deals worth between $5 million and $50 million are getting delayed by 30 days primarily because of delay in decision making by the prospective clients,” said Mr R. Srikanth, Executive Vice-President and Chief Financial Officer.

But even amidst volatility, the deal pipeline was healthy and the company had not seen any pricing dips, Mr Srikanth said. “There is a lot of movement from on-shore to off-shore and we are discussing pricing upgrades,” he said. The company is waiting to see the market play out during the current quarter and has given a conservative estimate of 5-6 per cent q-o-q growth. “Q1 is a sensitive quarter and we would not like to comment on our growth possibilities given that there are ongoing job cuts in (overseas) banks,” Mr Jain said.

Citigroup biz

When queried about business from Citigroup, a major client for Polaris, Mr Jain said “With Citi we are growing. As of now we are not hit and we see more demand. We are able to get higher pricing from Citi.”

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