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Krishnan Thiagarajan

MEDIUM-sized companies have realised that there is a widening gulf between them and frontline companies, in terms of both revenues and post-tax earnings, and that playing catch-up with their frontline peers is a futile exercise. Instead, since the economic downturn, practically all medium-sized companies have worked on business models which emphasise focus on "select verticals" (such as manufacturing, banking, telecom or retail) paired with technology specialisation (such as embedded systems or remote infrastructure management).

For instance, the Hexaware model, where it has nearly 50 per cent of its revenues coming from multimillion dollar `annuity' business from clients such as Deutsche Leasing or Exult, focussed on the German geography and built-up the PeopleSoft practice, accounting for 30 per cent of revenues. Or MphasiS BFL, which aims to integrate the offerings of its software services arm with MsourcE, its BPO arm.

To supplement this, they have worked on leveraging the strength of their anchor customer or built partnerships for growth. For companies such as KPIT Cummins or iGate Global, the predictability of their revenues is built around a strategic anchor customer.

For KPIT, Cummins Inc. is its strategic customer and for iGate, it is GE. In both the cases, the strategic customer accounted for over 40 per cent of their revenues in the latest quarter.

Similarly, Mastek and Geometric Software have used the partnership or joint venture route for growth.

During 2003-04, Mastek was selected as a software development partner by Syntegra, part of the BT Group and a leading consulting and systems integration company in the UK.

Geometric Software, which specialised in product life cycle management solutions for manufacturing/automotive sector also has working relationships with Dassault and EDS and is expanding on them.

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