Info-tech

‘We act as enablers of responsive and futuristic governance’

Thomas Abraham Bengaluru | Updated on August 31, 2018 Published on August 31, 2018

DIWAKAR NIGAM, CMD, Newgen Software Technologies

 

Newgen Software Technologies, a software products maker, boasts of not having any failed installation since its inception in 1992. Having got listed on the Indian bourses in January this year, it is working closely with the government in its efforts to digitise government works/projects. Diwakar Nigam, Chairman & Managing Director, a veteran of 35 years in India’s IT industry, and founding member of NASSCOM, spoke to BusinessLine on the company’s vision and the way forward. Excerpts:

You have major presence in banks, and government/PSUs works. With the government pushing for digital transactions in India and digitisation of government works/projects, how will Newgen gain?

We are a software products company providing enterprise-wide, mission-critical solutions helping organisations drive digital transformation and competitive differentiation. We help government agencies at state and national levels to seamlessly run their citizen-centric digital governance services. In FY18, about 14 per cent of our revenues were derived from the government/PSU segment. We have readymade solutions for e-governance such as e-Vidhan Sabha, e-Courts, e-Municipality, Smart City, Direct Benefit Transfer (DBT), etc. With India being on the cusp of becoming a ‘Digital Nation’, we leverage our comprehensive product portfolio to provide need-based solutions to our clients in the government sector. As Digital India takes a step forward in changing the face of the economy, we act as enablers of responsive and futuristic governance.

Global software spend is expected to grow at around 8 per cent during 2017-21. How will Newgen gain from this development?

We expect growing demand for software solutions from enterprises looking to fulfil their digitisation goals. Technologies like BPM and ECM are some of the fastest growing in the IT landscape, projected for next five years. According to ‘Ovum – Business Software Industry Report: Digitalisation, IT modernisation and automation are driving market growth’, BPM, ECM and CCM is an attractive and dynamic market with significant growth opportunity. The India software market is expected to grow at a faster pace than the global market (13.3 per cent CAGR 2017-2021 for ECM). The report suggests that the growth of ECM, BPM and CCM markets will outpace the overall technology market growth, which is expected to reach $19.7 bn, $8.4 bn and $2.1 bn by 2021, respectively. The North America ECM market is forecasted to grow to $6.4 bn in 2021 at 5.4 per cent CAGR (2017-2021). This presents a huge opportunity for us.

In FY18, we added 120 new customers, a significant development in our growth trajectory. Taking market predictions into consideration, such a development will certainly give us tailwinds and great incentives to expand our product portfolio further through investment in R&D which comprised approximately 7 per cent of our revenues in the previous fiscal. In the last five years, we have seen topline growth of about 20 per cent y-o-y. We expect the growth momentum to continue in the coming years. We are also expanding to newer geographies. We will continue to enhance our solutions to take advantage of market trends and tailor our products pertaining to region-specific demands. Going forward, the push for digitisation across the globe will drive-in those demands.

Though Newgen is trying to expand its product portfolio through investment in R&D for advanced features and technologies, your revenue is dependent, to a large extent, on selling new licenses to existing and new customers. How are you tackling this issue?

Our revenues are well diversified across geographies, customers and verticals. When we acquire a client, we usually provide an enterprise-wide platform, which they tend to use for many years. In fact, some of our customers are using our platforms for over 15 years. In our line of business, licenses automatically kick in as annuity business, which is known as annual technical support or annual technical maintenance. This, by default, generates annuity revenue for us. We also provide support and development services to our customers and charge fees on a periodic basis.

SaaS is another line of revenue for us where customers pay us subscription fee on a Per User Per Month (PUPM) model on monthly, quarterly or annual basis. While license revenue stream comprised about 27 per cent of revenues in FY18, we had a healthy annuity-based revenue stream which is largely recurring in nature and comprised 43 per cent of our revenues in FY18. As we expand, we expect the annuity-based revenue stream to grow in their share of overall revenues. This would also help in reducing the seasonality which is prevalent in the software licensing business.

Being a product-maker, maintaining intellectual property rights is key to Newgen. While you have been able to protect the IPR of your products till now, do you see any risks, going forward, for Newgen Infinite and Newgen Payments Bank?

As a company, we continuously focus on driving innovation and adopting solutions in line with rapidly-evolving technological trends. We protect our IPRs through patents and trademarks. As of March 18, we had 37 patent applications, including 5 registrations. While we have obtained trademark registrations for certain of our brands, including OmniDocs, Omni Acquire, OmniCompliance, OmniScan, OmniFlow, OmniReports and ChequeExchange and CheckFlow, we have made applications for obtaining trademark registrations for certain of our brands, including Newgen Infinite and Newgen Payments Bank. We have duly responded to all the queries by the Registrar of Trademarks.

Tell us about your expansion plans. You got listed only in January this year. So, why do you think investors should put their money in your company’s shares?

We are uniquely positioned in a growing market space. The applications built on our proven platform are extremely powerful and help organisations achieve their critical objectives. We are a global business; well-diversified across geographies, customers, and verticals. Our product leadership has enabled us to establish a marquee and diversified global customer base with long-standing relationships. We have an active customer base of 520+ clients running their businesses and critical operations on our platforms in 60+ countries. We also possess multi-vertical industry expertise with solutions in 17 different verticals.

While our India revenues continue to grow at a steady pace, we are strengthening our global presence with strong broad-based growth (y-o-y) in USA (46 per cent), APAC (25 per cent) and EMEA (17 per cent) as of Q1 FY19. We have started expanding our geographical footprint. Our business in the US has grown well and in Q1 FY19, we added 4 new customers, with enhanced average deal sizes. The business there is focused on SaaS/Cloud of which our revenues grew by 157 per cent y-o-y, though on a smaller base. We are also constantly focusing on innovation and expansion of product portfolio and new offerings including Mobility (Newgen Enterprise Mobility Framework), Dynamic Case Management, RPA with BPM, and Digital Sensing.

Newgen’s is one of the few software product organisations which have attracted multiple recognitions from leading advisory and research firms, including Forrester and Gartner. We have not had any failed installation since the time of inception in 1992, which showcase our focus and commitment towards our clients.

Published on August 31, 2018
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