The company is increasing its focus on the healthcare vertical to work with data service providers in the US.

Sitting on a cash pile of about Rs 400 crore, Hexaware Technologies Ltd is looking to acquire a company in the range of $40-60million (Rs 200-300 crore), according to a senior company official. The last acquisition that the Mumbai-based software company made was in 2006, when it acquired the US-based FocusFrame for $34.3 million.

“We are seriously looking at inorganic growth plans,” said R.V. Ramanan, Executive Director and President, Global Delivery, Hexaware. “We have indicated our plans to some investment bankers,” he said, without disclosing any name. “We want to complete the acquisition in 2013,” he said.

The target company should help Hexaware to grow in, say, the manufacturing practice, or strengthen the SAP enterprise application practice or should be in infrastructure management services. In addition, the target company should have clients in North America or Europe — two regions Hexaware has a large presence in.

Healthcare vertical

At the time of the acquisition, FocusFrame had 60 employees in Mexico. This has been ramped up to 350 people. “We are looking at a similar acquisition strategy for our inorganic growth,” he said. About 30 per cent of revenue for the Mexico centre comes from local business and the rest from the US, he said.

Ramanan said that the company is increasing its focus on the healthcare vertical to work with data service providers in the US. These service providers collect data from multiple sources, and Hexaware will help the clients in business intelligence tools, he said.

US President Barack Obama has been focussing a lot on healthcare reforms. For instance, the transition of the US healthcare industry from ICD-9 to ICD-10 for the medical coding system is a big opportunity for software companies. The new ‘ICD-10' code is the latest medical classification list for coding of diseases, symptoms, findings and diagnosis.

“Many clients would definitely look at companies like Hexaware to help them in the transition,” Ramanan said. On client spending, Ramanan said that existing customers are willing to spend more but are showing ‘cautious optimism’ due to the global slowdown. While business is stabilising in the US, the Europe market is still under pressure, he said.

Hexaware has revised its revenue outlook in the current calendar year. Due to certain unforeseen changes to a project plan in a large engagement for a customer, Hexaware now expects the revenues for the fourth quarter 2012 to be $92 million from the earlier announced $94.7-96.5-million range.

Revenue guidance

The revised revenue guidance also includes impact of $450,000 on account of Hurricane Sandy on the Eastern Coast of the US.

“The relationship with the client remains solid. All other projects and initiatives with the client continue unchanged and on track. The company remains on course to deliver above industry revenue growth over the medium term,” said P.R. Chandrasekar, CEO and Vice- Chairman, Hexaware, in a statement.

raja.simhan@thehindu.co.in

(This article was published on December 9, 2012)
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