Polaris expects WebLab to boost billing rates

Suresh Seshadri

CHENNAI: Indian software services firm Polaris Software Lab Ltd. expects its

new WebLab Internet technologies initiative to help boost its billing rates in

2001-02 (April-March), the company's chairman said.

"The WebLab should help us cut time to market across all our projects by

up to 200 per cent and help us move up the value chain by 15 to 20 per cent

which should boost billing rates in the next fiscal," Arun Jain told

reporters late on Tuesday.

Jain earlier announced the launch of WebLab - bringing together research

experts and software applications specialists to shorten implementation cycles -

at a cost of about Rs 65 million ($1.39 million).

He said Polaris had last month raised its average billing rates to over $25

per hour for new offshore software projects from $19 it charged existing

clients, and had similarly hiked onshore rates to between $90-125 an hour from

$67.

The billing rate increases had become possible after the firm made

significant improvements in its project support infrastructure, he added.

"Some of the new contracts we have signed after this hike in billing

rates include Warren Buffet's General Reinsurance and Hong Kong based Internet

firm, Pacific Andes."

"The whole aim is to help us move up the value chain and improve our

operating margins from around the 18 to 19 per cent levels to an industry

standard of about 25 per cent, especially since costs and salaries will keep

rising year after year."

Aims to develop intellectual property



Jain said he expected the new initiative to boost in-house research and
development.

"The WebLab will generate knowledge components which could go on to

becoming licensable IP (intellectual property) eventually."

He said the firm planned to hire about 30 to 40 researchers soon and deploy

about 40 per cent of over 200 WebLab professionals in on-site development work

to step up productivity and applications knowledge gathering.

Polaris shares were up two per cent at Rs 509 in early trading on Wednesday,

following the announcement on Tuesday.

The bechmark 30-share Bombay index was up 1.27 per cent at 3,993.71 points.

The firm's share is now over 35 per cent up from its calendar 2000 low of Rs

375.05 reached on October 24, but still a good 69 per cent off its year's high

of Rs 1,612.50 reached on February 23 before a recent stock split.

Last week, SG Securities picked Polaris as one among four Indian information

technology firms named in its "Jewels of Asia 2000" list.

The securities firm cited Polaris' significant strengths in the banking,

finance and insurance sectors as a factor differentiating it from smaller Indian

IT-service rivals and said the firm will be "a revenue-led growth

story". SG forecast the firm's net profit at Rs 593 million in the year to

March 31, 2001.

(C) Reuters Limited 2000.