USi bullish on India operations

USinternetworking Inc (USi), an application service provider, is betting big on its Indian operations. At present, the company has 610 employees out of which one-third are in India, at Hyderabad and Bangalore. Within the next two-three years, it expects its Indian operations to be half the size of its international operations.

The $80-million company had entered the Indian market through a BOT (built-operate-transfer) agreement with Intelligroup Inc. The agreement expired in May 2005 and in September last year, USi acquired Appshop, a player in the Oracle application suite, through which it established its operations in Bangalore.

Recently, it opened a new facility in Hyderabad. USi delivers application outsourcing, remote management, independent software vendors enablement and hosting services. The technical teams in India focus on maintaining and monitoring applications for USi's customers on an on-going basis.

Speaking to Business Standard, Bala Vasireddi, director (India operations), USi, said, "The Indian component has always been an important aspect for us. We are expecting continued expansion at both these centres over here. In fact, we are expecting to be half the size of USi's operations, within the next two-three years."

USi is targeting to increase its headcount in India by another 80 people by the end of December 2005. The new facility of the company in Hyderabad has a capacity of around 200 people.

"The reasons for our increased focus in India are not only availability of talent here, besides the cost factor, but also because the workforce over here is experienced in dealing with US-based clients," Vasireddi said. USi has a majority of its 150 clients based out of the US with 60 per cent of them being in the $billion-plus revenue league.

"Companies are increasingly outsourcing their entire enterprise applications to service providers as it not only helps them reduce costs by around 20 per cent but also helps them update their applications according to the changing business needs. Besides, it enables them to close their books faster," he added.

Some of USi's clients are GMAC Commercial Mortgage, Visa and Motorola. It also handles the entire credit card processing applications for a bank that is the leading credit card issuer in the US.

"The market for such services is continuously growing. According to IDC, the market for software as a service market was $4.2 billion in 2004. And by 2009, it is expected to grow to $10.7 billion. In fact, the market is expected to grow at a compounded annual growth rate of 21 per cent," he added.

In India, however, companies are managing their software applications on their own, according to Vasireddi.

"The cost for companies to manage their operations is not prohibitive over here. Besides, there is less awareness in India of such services by third party entities that manage and distribute software solutions for customers via a central data centre," he added.

USi, which provides service offerings like Ariba, Microsoft, Oracle, PeopleSoft and Siebel, is now planning to enter the SAP sector as well. On whether this would be through an acquisition, Vasireddy said that the company is keeping its options open.