Zensar Technologies CEO Ganesh Natarajan also heads the information technology committee of the Confederation of Indian Industry. In an interview with Swati Garg, he outlines his views on the outlook for the industry, and details next year’s plans of his 1991-founded Pune-based firm, which is a software wing of RPG Group, and offers a range of integrated IT and BPO products and services to Fortune 500 clients. Edited excerpts:
Despite talks of slowdown, the sector seems to be doing well. Is it?
Two things are happening. The demand environment is still strong; there is no real slowdown in spending. There is also the impact of currency; the US dollar is high against the rupee. So, this quarter one will see better results for both reasons. Everyone is flat in terms of revenues crores. Rupee has given an artificial boost. The demand in UK and Europe is good. This year, there should be no problems. Insurance is still strong, investment banking is a little weak because people are wary of spending money. Healthcare will grow primarily because of the ageing population in the US and Europe. Next year is difficult; it will probably be different. There is a problem in Europe, and there is a cascading effect on US. So, 2012-13 will be different, but the current financial year should continue to be robust.
What is the outlook for the next year?
Last year we thought there would be problems for this year. But now it looks like there is no double-dip recession. It also looks like there will be some method of insulating the EU from any major problem. But it is tentative. So, no one can predict what will happen in six months, given the volatility of the situation. My expectation is this: the growth next year may be a little lower compared to this year. The industry has talked about 16-18 growth expectations. Infosys has said growth will be 17-19 per cent.
Despite the talk of slowdown, hiring of freshers has been robust this year. What is the hiring outlook for the industry?
The idea has been hiring more people at the junior level and trying to move towards more managed services. Hiring is more outcome-based. Companies are looking at putting more junior people. The trend of hiring freshers will not continue. It will be a mix of lateral hiring and freshers. In the next six-seven months, the market will stabilise. If fears of slowdown gain strength, hiring levels will slow down.
What are the plans for Zensar?
We have 6,500 employees at present. We plan to end the year with about 6,800 employees. We have done well this year; we have seen good growth across verticals, including manufacturing, retail insurance and connected services.
You have said you would look to expanding in smaller cities and new ‘work from home models’...
Starting April, we will invest in technology, encouraging employees to work from home. In the long run, our plan is that 30 per cent of our resource-base need not come to office at least a couple of days a week. Also, we are starting to work in two cities with partners, by connecting them to our technology. This will help them work through their operations, while helping us with ours. Next year, we will start doing a lot more work through other people and through home working. This will help us not just keep costs down, but also help us tap into a larger talent pool across multiple cities.
What is growth outlook for Zensar?
We have the benefit of the acquisition last year. Hence we are looking to grow faster than the industry average of 16-18 per cent growth. We are in a good place right now in terms of growth. We expect to do over Rs 1,550 crore in revenues this year.
You are integrating last year’s acquisition. Are looking at new assets?
We will probably look at something in the middle of next year. That will be smaller — in the range of $25-30 million in the manufacturing or the product life-cycle management sector. We are in the process of evaluating four-five companies. As of now, it is a passive search.
