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Wednesday, January 31, 2007
His is a homebred product company that has been making some bold and large acquisitions of overseas telecom companies. Firmly focused on the telecom software space, Menon exudes confidence in playing in the operations support system (OSS) space taking on biggies such as Amdocs, IBM and Oracle.
He spoke to Priya Padmanabhan of CyberMedia News about the company’s acquisition and product strategy. Excerpts:
You have recently made two acquisitions of over $100 million. Being a company with a modest revenue run-rate, how are you managing these big-ticket acquisitions?
We have always stated that we would pursue both organic and inorganic routes to enhance our product portfolio. Including the recent Syndesis acquisition, we have made seven acquisitions in the last seven years that amount in cash and stock to around $320 million. We are also raising around $200 million by issuing to issue Global Depositary Receipts (GDRs). Internally, we have developed the bandwidth and capability to manage acquisitions. It has improved over the years. It is part of our DNA now.
Given your M&A ramp-up, are you continuing to build products internally?
We continue to focus on building products internally. For example, we have built products in the areas of revenue maximization and service fulfillment. There are two reasons why we make acquisitions: to acquire products and second to acquire customers. We assess the buy or build option and have gone in for acquisitions since it takes around five years to build certain products. So, we make buy-outs to crunch this time and not because of lack of ability to build products.
Are you eyeing any acquisitions in the near future?
We have stated before that we are looking for buy-outs in three areas, namely revenue maximization, service fulfillment and service assurance.
You recently undertook a branding exercise for your revenue maximization products. What was the rationale behind this?
Following acquisitions, we ended up with two types of revenue maximization products. There was a similar product overlap. Since we couldn’t have both these lines, we did two things: integrated the products and also brought in a nomenclature. This suite of products is named ROCware and the six products have also been re-branded. It reflects our MNC nature. The re-branding is a good success so far and customers like the concept.
How do you plan to take on the big players in the OSS space such as Amdoc, IBM and Oracle?
We are expanding into the broader OSS market. The revenue maximization space is traditionally a fragmented market. While HP and Oracle are bigger companies, which are into many different things, we have the right focus in the space. Today, our share in the space is bigger than that of Oracle.
Post-Syndesis acquisition, the addressable market for revenue assurance, service assurance, and service fulfillment segments is $2.5 billion. This is expected to touch $4.5 billion by 2010.
What is your take on the M&A scene among Indian companies?
There are a lot of IT services companies that are going in for acquisitions to gain footprint abroad. While I cannot comment on the services business, I feel that it is high time India woke up to the product story.
© CyberMedia News
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