R&D to power Megasoft

In this connected world of information technology, the 'big sized' take away most of the IT business and the smaller entities face an identity crisis. While some try to beat the feeling of insecurity by aping and talking big, there are those who refuse to take shortcuts and make a mark through the hard way.

Megasoft, an IT services firm, chose to follow the second path. G V Kumar, managing director, believes that his company's transition from an "any other IT services firm into a leading domain-led intellectual property-driven technology company," will only ensure better prospects in the face of competition.

Kumar was the founder of Xius, which was into development of telecom technology products, before it was merged with Megasoft in 2004, and that he feels was a turning point of the decade-old Megasoft. Telecom technology products now constitutes 22 per cent of Megasoft's total revenues.

Kumar aims to change the portfolio of the new company --- in favour of hi-rewarding, original, R&D-led product development. The company, which now supplies real-time billing, inter-group convergence technologies to telecom platforms, recently entered into a revenue sharing agreement with a Canadian wireless telephony operator.

Over 150 of the company's 430-strong workforce has now been exclusively deployed for telecom R&D in Hyderabad and it may go up to 250 the next year, he says.

Kumar sees great opportunities for the products involving telecom technologies both in advanced markets like Europe and the US and emerging markets like China and India.

Though he heads a trans-national company, Kumar appears to be reflecting the mood of local small and mid-size companies, which are increasingly under pressure to offer added advantages to clients in terms of services and flexibility over biggies like Wipro and TCS to create their own market, while focusing on specialised areas.

ValueLabs and several other mid-sized and smaller companies in Hyderabad are trying to increase product development operations in similar areas like telecom, mobile and web-enabled services though a significant portion of their revenues still comes from IT services. Even Megasoft earned 74 per cent of its revenues, during the first quarter of 2005, from IT consulting services.

Kumar is at his best when it comes to sharing his views on the 'low-end IT services' business, which, according to him, improves only with the size. He insists on differentiating hi-end quality work with less number of professionals from low-end services.

"What a big Indian software company can make by employing 1,000 professionals will be achieved with just hundred people at the Microsoft. That's because they are strong in the area of R&D. In low-end services business, you would be able to increase the revenues and business only if you increase the headcount whereas quality work yields higher revenues and requires lesser manpower," he says.