Excerpts: The lion's share of your business comes from the US. Don't you think this is risky?
More than 85 per cent revenue comes from the US. Patni started in Cambridge, Massachusetts. It has US-origin in its DNA.
Apart from this, the US accounts for 70 per cent of the overall IT services market.
If you look at the statistics of the top 10 players in the market, you will find that business in the US for all these companies has grown significantly over the years.
The larger part of projects still comes from the US. I don't think this trend is going to change over the next few years.
But we have started diversifying our business. Europe and Asia-Pacific, especially Japan, seem to be good markets for us.
We have made significant investments in these markets in terms of selling capabilities. These will start giving returns soon.
The present backlash over outsourcing in the US has been a headache for companies in India. What are your views on this?
The backlash is an emotional issue but business decisions are not based on it.
This year, when the backlash was one of the hot issues in the media, the industry grew at a faster rate.
I have been talking to many off-shoring vendors. All of them are of the view that there is optimism all round.
The question here is: where is the backlash? It is there in the minds of the common man and in geographies.
As a business imperative, companies know they have to adopt a global delivery strategy. I don't think they are going to change that. They will handle all these issues as local vox pops.
If you look at the overall IT services business, you will see that everybody realises that the Global Delivery Model (GDM) is here to stay.
GE has been one of your principal customers accounting for 35 per cent of your revenue. Who are your other customers?
I cannot name all of them owing to confidentiality requests, but some prominent non-GE customers are Guardian Life Insurance, ABN Amro and so on.
We have about 32 customers from whom we derive over $ 1 million revenue a year. They are all large companies with sizeable IT spending.
GE spends close to $ 100 million with us. In all, we have about 200 customers.
You acquired The Reference Inc in the US last year. What is next on the cards?
You have to have the scanning and evaluation done on a continuous basis.
Once in a while the physics, chemistry and mathematics will work out right.
At that time you move forward and do something about it. That does not mean that that is the only company you have looked at.
The acquisition strategy is basically a move towards offering an integrated set of services into our vertical customer base.
We would like to create a strong banyan tree rather than a forest growing in different directions.
Are you scanning companies in India as well?
The vertical expertise obviously requires that companies get scanned in the geographies you are looking after.
This leads the way to scan Indian companies. So, we are looking at both ends.
Do you plan to grow by acquisitions?
Acquisition will be an additional growth avenue. We have posted a high, 41 per cent compound annual growth rate over the past five years.
And in these five years, we have acquired only one company. So, our intrinsic growth is high, too.
What infrastructure do you have at present?
We recently announced our latest development centre in Bangalore. We already have multiple development centres at Chennai, Gandhinagar, Noida, Mumbai and Navi Mumbai, which takes the number of centres to 12.
We also have an overseas development centre at Boston, which was created after the acquisition. It is active in providing creative services to the financial sector.
What about investments? Do you have any plan to increase head-count?
We are eyeing two new initiatives, including the Bangalore development centre.
We are also planning a software park called "Patni Knowledge Park" at Airoli, near Navi Mumbai. The knowledge park will accommodate 17,000 professionals.
Our capital expenditure plan for this year is pegged at $ 30 million. We will also invest Rs 230 crore for the Knowledge Park.
In addition, we will make huge investments in our Bangalore development centre.
We also have plans to add about 1,800 to 2,000 professionals to our present workforce of 7,862. We had recruited about 1,600 people last year.
Our head-count will keep pace with our growth. Most of our services will be delivered from our development centres in India, in the near future at least.
Any plans for an overseas listing?
We are not considering any such option at present.
Do you plan to expand your presence to new verticals?
About 80 per cent of our revenues come from insurance, manufacturing, banking and financial services. We are planning to enter new verticals such as retail and hospitality, too.
Patni claims to have the largest private equity investment in the history of India with investments from General Atlantic Partners (GAP) and GE. Do you see scope for more private investment in the company?
The initial public offering has enabled us to broadbase Patni's position. We have a strong balance sheet. The IPO has only strengthened it. I don't think we need funds from outside.
How do you view the future of outsourcing in India?
First, we have to see what we are offering. We offer low-cost quality services based on a well-tested GDM. This will not be easy for other countries to re-create. There will be some alignment in the market. Non-English speaking countries may find the east European countries as attractive off-shoring destinations. Similarly, China will gain from Japan.
This will not, however, affect the Indian market. The companies here offering such services should be keen on adding value. They must try to understand the business of their customer, not just the technology.
Employee stock options (esops) appear to be losing their attraction. Is that true for Patni?
We have a strong esop programme and it is still considered as an attractive tool to retain employees. There is lot of excitement about esops in our company.
