Glodyne sees a golden opportunity in India

MUMBAI, INDIA: In this interview, Annand Sarnaaik, chief executive of Glodyne Technoserve Ltd, a technology IMS company, talks about the company’s business in Indian as well as overseas markets, its performance and growth levers, opportunities in the government sector, UID project and much more. Excerpts:

CIOL: Glodyne Technoserve posted Rs 659 crore revenues with a net profit of Rs 115 crore. What are the factors that helped it register such a huge growth?

Sarnaaik: Glodyne has shown consistent growth over the last few years and has expanded its geographical presence in North America and its solutions across key sectors in India. In the domestic market, major growth levers have been our platform-based solutions across the Education, Financial Inclusion and E-governance sectors.

Our Education Managed Services automates the entire process in an educational institution and universities while providing an interface to all stakeholders and continue to add customers both in retail (school and college segment) and enterprise spaces (University segment).

We have been experiencing great demand for our unique cloud-based solution and we continue to see education sector as a great opportunity.

Financial Inclusion space continues to drive growth and strong performances. We have created a very strong execution pipeline across a few states in the last few quarters and will continue to do so. One of its kind and probably the largest urban financial inclusion program in the country — the labor automation in Maharashtra known as Mahashramm — is nearing pilot completion.

While in the e-governance, our execution pipeline in the MNREGS/ Labour automation and PDS is very strong. We have also initiated two pilot projects in the last quarter. Our flagship project E-Shakti in Bihar continues to bring us laurels. It was selected as one of the best ICT programs in Public Services at INTEROP 2011, PC Quest Awards 2011 and e-India 2011.

With the three sunrise factors catering to a strong quarter, we are constantly making efforts for building leadership positions for the company in these sectors.

Also, last year we acquired DecisionOne Corporation, a US-based IT firm that generates revenue of around $200 million. This is one of the largest pure-play technology IMS companies in North America and has extensive capabilities in providing infrastructure management services in the US and Canada.

We are focused on cost optimization and services expansion strategies in the US as of now. Our short-term objectives are margin improvements through transition, while in the long term, we aim to enhance business mix through transformation of services.

CIOL: Which are the key verticals that contributed to your growth? Also, please explain how Glodyne's business has been doing in India and abroad?

Sarnaaik: As mentioned earlier, we have seen higher growth in the Education and Banking sectors in India. We expect Education, Financial Inclusion and E-governance projects to drive our business in the country. The financial inclusion services is a differentiated vertical for us in a sense that most of our businesses in this segment are tied up with one of the government programs.

For instance, financial inclusion in Bihar is tied up with the E-Shakti program. It means one of these e-governance programs sits on the financial inclusion program. Hence we believe that financial inclusion as a business model is going to remain one of the thrust areas for Glodyne in times to come. We continue to add many clients in the Education Managed Services space, too.

During the last quarter, 14 new clients have been added of which four happen to be out of the US and 10 from India. In the US business, we are planning a transition of delivery mix both on cost and revenue fronts. We bagged a few large deals in the retail and technology space, and saw stable growth across the travel, healthcare, technology and manufacturing sectors. Our US business was almost 37 per cent of the overall business as of last quarter.

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CIOL: Glodyne has also revised its earlier guidance from Rs 2212 crore to Rs 2234 crore. What's the rationale behind revised guidance, given the uncertainties in global economies?

Sarnaaik: Most of our business in India comes from our platform-based services we have built for Education, Financial Inclusion and E-governance sectors. We have a strong execution pipeline. While reviewing the business we can see the predictable revenue stream. Based on that we have revised our guidance.

Our US business primarily operates in the operational expenditure (opex) of any IT budget — it is stable and considerably recession-resistant. In the current scenario we expect clients to look for value services at better price which is the key philosophy of the remote services model. To add to it, the US happens to be primarily an on-site geography. So a lot of transition is expected in the near future making it a stable $200 million dollar business for us.

CIOL: Glodyne is largely focusing on e-governance project in India. So what kind of strategy have you adopted to tap opportunities in this segment? Any updates on the company's business in association with the UID project?

Sarnaaik: To clear the air, we are not solely focused on e-governance. It is one of the important verticals for us. To provide some colour to the break up, e-governance at consolidated levels contributes 15 per cent of the overall revenue. We have built a strong execution pipeline in certain social programs like MNREGS, PDS and Automation of Labour force which function on an outcome-driven platform based model.

Once the UIDAI accomplishes its path-breaking objective of creating an identity of every citizen of the country, a lot of transformation would ride on it. We are keen on UID in a state where we already have a program running like Bihar where we are into MNREGS.

Glodyne’s E-governance Managed Services shall benefit the government in reducing duplicate efforts and increasing the effective utilization of resources.

CIOL: Are you looking to expand the company's presence outside India? Also, are you planning new facilities, acquisitions and to increase headcount?

Sarnaaik: We do understand and have experienced that a right strategic acquisition can be a strong growth lever for the company. In Glodyne we have a focused M&A team which keeps looking at various opportunities in the areas of our interest. If there is a strategic fit which can provide multi-fold benefits to our core businesses, we would definitely look at such an opportunity with keen interest. However, right now we do not have any acquisition plans; we are more focused on scaling the offshore business for Glodyne DecisionOne operations and re-aligning the work force as per the cost optimization plan.