 "SOFGEN enables us to tap into $300-500 mn opportunity: Ravi Vasantraj")
The latest acquisition of Sweden-based SOFGEN is its first ever acquisition in the banking finance services and insurance (BFSI) space.
Ravi Vasantraj, global head, BFSI, Tech Mahindra in an interview with Shivani Shinde Nadhe talks about the rational of the acquisition, why organic growth is the best way of growing in this vertical and growth prospects. Edited excerpts:
What was the rationale for acquiring SOFGEN?
SOFGEN is a niche player in the core banking system, wealth management, commercial and retail banking solutions. It has atleast 20 odd tier-I banking clients. What we liked about the company was that they grew our presence in Europe, and gave us logos which can be the engine of future growth for the company.
What I mean by engines of growth is we can take Tech Mahindra's full services portfolio to these large players and leverage our services offering.
This is your first acquisition in the BFSI space, how do you think this will help you grow?
When we acquired Satyam, we lost several of the tier-I customers. Over the last four years we have been able to grow this practice well, we have registered growth of compounded annual growth rate of 18%. With this acquisition and access to 20 large customers, this gives us ability to scale faster.
At present BFSI is about 10% of our revenue pie, in the next three years we want to take this to 20%.
Will this acquisition now allow you to be part of the large deals in the BFS space? What is the market size of opportunity?
For us large deals are deals that are more than $50 million in size. We are already working on a large deal with SOFGEN. This acquisition gives us the ability to tap into opportunity worth $300-500 million.
Compared to some of the other acquisitions this seems very small. Do you think you can compete with well entrenched players like TCS, Infosys and other MNCs in the same space?
If you look at our September quarter numbers we reported 22% revenue growth year-on-year. We have been the fastest growing company. The acquisition scale maybe small, but as stated our focus has been micro-verticals.
SOFGEN is a well-know player among wealth managers and private banking. This fits in our differential strategy. We are choosing our spots and going ahead and SOFGEN is an example of that strategy.
This differential strategy is also evident in the payment systems when we acquired Comviva.
Your CEO has stated that acquisition is a significant part of growth for Tech Mahindra, do you see some more acquisitions in this space?
As of now we have a very organic growth plan in place. If we see a potential target we will think about it. Banking and finance is a very mature segment. We have been on a look-out for acquisition for a long time.
We want to scale and hence acquisition will be key, but it has to fit into our strategy. If you look around in the banking and finance space acquisitions have been primarily in the product space.
After the Satyam acquisition we lost clients and over the next three years we had a strategy of defending our existence. W e started creating differential platforms across verticals. Now we are in a mode to scale. We are going to be aggressive players in the market for large deals.