Zensar eyes acquisition, aims for $1 bn revenue by 2017-18

Targets to enter product engineering segment; unit to be $100-mn in revenue in 4yrs

Zensar Technologies, the IT services and solutions firm from the RPG group, said that it is in talks with two US-based firms for acquisition as part of its target of reaching $1 billion in revenue by 2017-18.

Senior executive from the company said that about $100 million of the $1 billion target will come from acquisitions. Zensar is open to acquire companies with revenue of $20 million to $50 million, said Ganesh Natarajan, vice chairman and CEO, Zensar Technologies.

"In terms of immediate target we are looking for company that will give us capability in the infrastructure management services and SAP consulting. In the longer term we are interested in targets that will give us capability in the product engineering space such as embedded systems, outsource product development and product lifecycle management," added Natarajan.

Product engineering that will be a new focus for the company, Natarajan believes, will be a $100 milion business unit in the next four years. "A lot of our sub-goals, such as the $100 million product engineering will be part of the $1 billion target. Though acquisition is an integral part of the growth target, we will built all of our new focus units organically. For instance, SAP as a practice is already a Rs 100 crore unit for us," he added. In case of Product Engineering the company is in the process of setting up a centre from its Bangalore campus.

Natarajan believes that after product engineering is a natural expansion of the firms presence in the manufacturing segment. "We stopped at enterprise resource management in manufacturing. But having created a good base I think its time for us to go a step ahead," he added.

Meanwhile, for the fiscal year 2013-14 the company is expecting to report double digit growth with geographies like US and Europe doing well followed by Africa. "We have so far a pipeline of deal worth $200 million. Of this about four to five deals are in the $10 million range," said Natarajan.

Impact of Immigration Bill

Natarajan like the industry is hopeful that the final version of the immigration bill will be a much more watered down version from the current bill. "A lot depends on how the bill gets created in the House of Representative. There are three main things--increase in visa fees, creation of more jobs in the US, and the 50-50 provision, which means that 50 per cent of the employees should be US citizens. But the biggest concern area is the outplacement clause," he added.

However, Natarajan added that the ongoing debate on the immigration bill has not impacted business in any way. "I have just returned from the US and I did not have any sort of conversation with clients that hinted towards change in the existing business model. Neither has this impacted business or deal flow," he added.