 "I'm hoping we'll do one large buyout this year for scale: Sushma Rajagopalan")
After she assumed charge as managing director and chief executive officer of midsize information technology services company ITC Infotech about eight months earlier, Sushma Rajagopalan has been trying to change the DNA of the Bengaluru-based company. She talks to Bibhu Ranjan Mishra about some of the new focus areas and strategy. Edited excerpts:
How has been the experience?
The leadership team here is doing everything to build a technology company that will last for the future. I am trying to drive the concept of ‘stay in power’ while also being ‘future ready’. That means we have to scale (up) the company while not losing sight on the future. We are trying to build these with focus on five areas — domain, data, digital, differentiated delivery and design — we internally call the 5Ds.
It is certainly no more about only cost and arbitrage. The way technology is being bought and the profiles of the people responsible for the buying decisions have also changed. The maintainability of software, which used to be a key service opportunity for IT companies, is also decreasing. This is because people who were buying licensed software are seen buying this as a subscription or software as a service.
How is ITC Infotech changing from within?
Foremost is a change in mindset. There is a fair degree of conviction that we can make a difference and become a formidable competitor. We are bringing in sharper focus. We are pretty clear that we can’t be everything to everybody but we can be everything to some set of people.
We are also taking some unorthodox baits to make these happen. For example, we have started working with the start-up system to foster the spirit of innovation and supplement the works done by our internal research and development. We are helping those co-building solutions for faster time-to-market, and marketing those exclusively.
Would you consider acquiring some of these start-ups?
Our acquisition strategy is three-fold. Immediately, we would buy companies for scale, which will be followed by buying small but 'future ready’ companies in the sub-$10 million category. Eventually, we will do a big-bang acquisition. This year, we might have to do two acquisitions. I am hoping we will do at least one acquisition this year which will be for scale, a company with revenue in the range of $75-100 mn.
But, in the 15 years of its existence, ITC Infotech has done only one acquisition, also held to be not so successful.
We are not a very acquisitive group. Even now, we will do very focused acquisition. We have got a very clear inorganic road map. We are spending a lot of time in figuring what our first ideal acquisition this year should be. We are heavily in the market. There is not a single deal in the market that we are not aware of.
Any change in your strategy and organisational structure?
It has changed quite a bit. For us to propel as an organisation, we already had a strong business consulting group. We’ve added technology consulting to it, by taking existing people with demonstrable technological depth in multiple industries. We have created multiple lines of business, with a mix of both the core as well as newer areas like ‘digital’. By the end of this year, I am going to bring a chief digital officer to drive our digital services business.
ITC Infotech used to be heavily focused on the European region, especially Nordic. Is there a change in revenue mix?
While Europe is very important for us, America is the largest market for the industry. We have come to a stage where North America is as comparable as Europe in terms of revenue contribution.
By when would ITC Infotech be ready for an IPO (initial public offer of equity), which your chairman had a couple of years ago said would happen eventually?
Every company has their own sets of reasons why they should go for an IPO. At the moment, it is very clear we need to grow
and be relevant. Everything else is secondary. It is eventually the investors’ call. Personally, I am not driving the company for that (IPO); I am driving the company for growth.
What is your revenue? Any target the company has set internally?
We were around $250 mn (Rs 1,500 crore) in revenue in FY15, and we want to be at least $1 billion by 2020.
How practical is that, given that you have to grow four times in five years?
It is very practical. If I do an inorganic deal this year and continue to grow at 25-plus per cent, I can do it in four years.
Recently, Danske Bank, one of your largest clients, decided to set up its own captive technology centre in India. How much will that impact your revenue this year?
In this sector, it’s very common that customers come and go. However, there is a huge difference in this case. Danske continues to be one of our key clients. We will still grow significantly this year, high double-digit and above the industry average.
How has been the experience?
The leadership team here is doing everything to build a technology company that will last for the future. I am trying to drive the concept of ‘stay in power’ while also being ‘future ready’. That means we have to scale (up) the company while not losing sight on the future. We are trying to build these with focus on five areas — domain, data, digital, differentiated delivery and design — we internally call the 5Ds.
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What change are you noticing in the industry?
It is certainly no more about only cost and arbitrage. The way technology is being bought and the profiles of the people responsible for the buying decisions have also changed. The maintainability of software, which used to be a key service opportunity for IT companies, is also decreasing. This is because people who were buying licensed software are seen buying this as a subscription or software as a service.
How is ITC Infotech changing from within?
Foremost is a change in mindset. There is a fair degree of conviction that we can make a difference and become a formidable competitor. We are bringing in sharper focus. We are pretty clear that we can’t be everything to everybody but we can be everything to some set of people.
We are also taking some unorthodox baits to make these happen. For example, we have started working with the start-up system to foster the spirit of innovation and supplement the works done by our internal research and development. We are helping those co-building solutions for faster time-to-market, and marketing those exclusively.
Would you consider acquiring some of these start-ups?
Our acquisition strategy is three-fold. Immediately, we would buy companies for scale, which will be followed by buying small but 'future ready’ companies in the sub-$10 million category. Eventually, we will do a big-bang acquisition. This year, we might have to do two acquisitions. I am hoping we will do at least one acquisition this year which will be for scale, a company with revenue in the range of $75-100 mn.
But, in the 15 years of its existence, ITC Infotech has done only one acquisition, also held to be not so successful.
We are not a very acquisitive group. Even now, we will do very focused acquisition. We have got a very clear inorganic road map. We are spending a lot of time in figuring what our first ideal acquisition this year should be. We are heavily in the market. There is not a single deal in the market that we are not aware of.
Any change in your strategy and organisational structure?
It has changed quite a bit. For us to propel as an organisation, we already had a strong business consulting group. We’ve added technology consulting to it, by taking existing people with demonstrable technological depth in multiple industries. We have created multiple lines of business, with a mix of both the core as well as newer areas like ‘digital’. By the end of this year, I am going to bring a chief digital officer to drive our digital services business.
ITC Infotech used to be heavily focused on the European region, especially Nordic. Is there a change in revenue mix?
While Europe is very important for us, America is the largest market for the industry. We have come to a stage where North America is as comparable as Europe in terms of revenue contribution.
By when would ITC Infotech be ready for an IPO (initial public offer of equity), which your chairman had a couple of years ago said would happen eventually?
Every company has their own sets of reasons why they should go for an IPO. At the moment, it is very clear we need to grow
and be relevant. Everything else is secondary. It is eventually the investors’ call. Personally, I am not driving the company for that (IPO); I am driving the company for growth.
What is your revenue? Any target the company has set internally?
We were around $250 mn (Rs 1,500 crore) in revenue in FY15, and we want to be at least $1 billion by 2020.
How practical is that, given that you have to grow four times in five years?
It is very practical. If I do an inorganic deal this year and continue to grow at 25-plus per cent, I can do it in four years.
Recently, Danske Bank, one of your largest clients, decided to set up its own captive technology centre in India. How much will that impact your revenue this year?
In this sector, it’s very common that customers come and go. However, there is a huge difference in this case. Danske continues to be one of our key clients. We will still grow significantly this year, high double-digit and above the industry average.