Aztecsoft to go for quality clients

Firm expects double digit revenue growth in third quarter.

Product engineering specialist Aztecsoft is now gunning for quality clients, which could become million dollar accounts for the company in future, to improve its bottomline.

The Bangalore-based firm, which noticed two consecutive bad quarters post the transfer of the offshore delivery centre (ODC) of Dendrite and the appreciating rupee, is expecting to increase its revenue double digit in dollar term in the third quarter of the fiscal 2007-08.

This could be achieved looking at the strong pipeline from the existing clients and judicious selection of new clients, says the company. "The challenge in the product engineering space is that when there are smaller clients, they grow initially and then their growth rate slows down. Even in many cases they don't succeed in the long run. Moving ahead, we will see a fewer number of clients addition, but higher quality clients," said Samir Bodas, president, Aztecsoft.

He said even though the company closed just four clients in Q1 of FY07-08, there was a fair chance of these becoming million-dollar-plus clients in the next few years. "We are now going after higher quality clients so that they would offer higher quality revenue to help us in achieving steady growth on a quarter-on-quarter basis," Bodas added.

The Dendrite ODC deal, which was based on build operate and transfer (BOT) model, came to Aztecsoft on November 18, 2003. When the Dendrite ODC was transferred in December 2006, it achieved a size of 325 people contributing to over 10 per cent to Aztecsoft's consolidated revenue.

The transfer of Dendrite ODC immediately affected Aztecsoft in the fourth quarter of fiscal 2006-07, when the percentage of revenue from its Top 10 clients came down to 58 per cent from 70 per cent a year ago. Aztecsoft had 87 active clients as on June 30 last. At present, its revenue contribution from the Top 5 clients stands at 46 per cent and the Top 10 clients at 58 per cent.

Bodas said while the Dendrite transfer affected the company's revenue by 38 per cent quarter-on-quarter basis in Q4 of FY06-07, this was narrowed in Q1 of FY07-08 when the topline dropped 5.1 per cent sequentially (it saw an increase of 2 per cent in dollar terms). "In Q2, we are expecting a 6-7 per cent growth in our topline and in Q3, we are expecting double digit quarter on quarter growth in dollar term."

Microsoft, AoL and Hyperion are some of the key clients of the company. Going forward, Aztecsoft is planning to deepen its relationship with the existing clients and expand in the mobile and wireless segment. Bodas said that the company would pitch for customers in the WiMAX and WiFi segment.

The company, which has also a cash reserves of about Rs 65 crore, is looking at acquisitions in Europe and the US to enter into new domains in product engineering. "It is a very high priority for the company. We are working very hard to get this. We have some companies in the radar and we keep evaluating different companies," added Bodas.

Meanwhile, Aztecsoft has added some key executives to its senior executive team. After VR Govindrajan quit as the CTO, the company appointed G Srinivasaraghavan, a former Infoscian as the new CTO.

Besides, Amar Karvir and Venkatesan Varadarajan have joined the company as V-P, head - Strategic Accounts Business Unit, and vice-president (Business Development) respectively.