Syntel plans $50mn capex

Nasdaq-listed, Syntel services and business process outsourcing (BPO) with a market cap of $1.7 billion, plans to spend $50 million (around Rs 200 crore) in the first phase for developing its two centres in Pune and Chennai.

Syntel is developing close to 11 lakh sq ft spread between the two centres. It already has a 77-acre campus in Pune. These centres will be developed in a phased manner. The company is also planning to increase its headcount from the present 9,000 to 25,000 by 2010.

"This is a part of our 1-5-10 agenda. By 2010 we want to be a $1 billion company with $5 billion as market cap. And to achieve this, acquiring talent is going to be key. Besides we want to accelerate our growth from the present 25 per cent to 30 per cent and move beyond traditional markets," says Keshav R Murugesh, president and COO, Syntel.

Centres at Pune and Chennai will have training centres with 2,000 seats each. The company¿s attrition, including in the IT services and BPO is 15 per cent. To tackle the increasing wage hikes and attrition Syntel is also looking at tier II and III cities.

Says Murugesh, "We are considering Andhra Pradesh, Tamil Nadu, Gujarat and Rajasthan for our tier II expansion. By third quarter of this fiscal we will finalise one. But the idea of developing in tier II is to create a walk to work environment."

The company's strategy of cross selling its services and BPO early-on has worked well. "Almost 60-70 per cent of Syntel customers have opted for bundled services. While many of the Indian IT companies have just started the offering," adds Murugesh.

The services and BPO company has a revenue break up of 86 per cent and 14 per cent respectively from both these segments.

The company focusses on banking and financial service, Insurance, healthcare, automotive and telecom, and other verticals. Syntel plans to take its services in testing, and product lifecycle management into other markets.

Moving ahead it wants to concentrate on expanding their geographic reach. The US contributes almost 90 per cent to Syntel's revenues, which it wants to bring to 70 per cent by increasing their focus in Continental Europe, and EMEA countries.

The US-based company with India operations is also looking at the latter as a potential market.

"We have been watching the Indian market for last one year and we do see good potential here too. We already have one leading financial services company as our client. In the next year or two our mix coming from Indian market will also increase," adds Murugesh.