Syntel to spread to tier-2 cities

Syntel, the US-based software services provider with India-centric outsourcing model, would be looking at setting up development centres in Tier 2 cities to drive down costs and leverage the advantages of being among the first movers to these cities.

The Nasdaq-listed company, through its Indian subsidiary Syntel (India), has three development centers in Pune, Mumbai and Chennai. Currently, its global headcount is about 5,500 and the company is planning to take this to around 10,000 by the end of 2006.

Addressing a press conference, Keshav R Murugesh, chief operating officer, Syntel, said that the company was looking at Tier 2 cities like Coimbatore and Madurai in Tamil Nadu, a couple of locations in Andhra Pradesh and Maharashtra to set up its own campuses.

The company has done study on educational institutions, availability of talents and other incentives in these cities. On the sidelines of the press conference, Murugesh said that he would be making a presentation to the board of the company in the next couple of weeks on Tier 2 cities. The company is expected to commence acquisition of land in the next two quarters in these cities.

He said that the company's financial position was strong with over Rs 530 crore in cash and short-term investments at the end of third quarter of 2005. The company would invest the cash in developing its business rather than keep it in banks, he added.

When asked about the proposed size of the centres and investments in Tier 2 cities, he said that it would depend on the demography and supply of talent. Syntel's next focus would be on identifying locations for future growth and the company would continue to invest more in Chennai and Bangalore while Mumbai would be the growth centre in the longer term.

The company expects to commence work on the campus in the 30 acre land, which it had bought recently on the IT corridor of Chennai, from January and the first phase of the facility, with 5000 seat capacity, is expected to ready by end of 2006.

While building this campus, it will be creating interim facilities to house about 600 people in the city. Chennai facilities at present employ around 1,110.

As part of its future strategic plan (1-5-10), Syntel is hoping to achieve a revenue of $1 billion and market capitalisation of $5 billion by 2010. It ended the third quarter of 2005 with a revenue of $58.5 million compared to $46.6 million in the same period previous year. Net income was $11.7 million compared to $9.7 million for the period