'Start offering higher value-added services'

In this conversation, Rahul Kanodia, Datamatics Global Services' vice chairman and CEO, talks to Pankaj Maru of CyberMedia News about the company's business transformation, growth opportunities in various verticals, business strategy as well as economic scenario in the US and its impacts. Excerpts:

Since 2010, Datamatics has moved from just being an IT service provider into solutions space. So what’s the rationale behind such business transformation of the company?

The theme we have taken is one of the next-generation solutions. If you look at most Indian companies including Datamatics, traditionally they are into business of services — whether software services or BPO services, and today services already have become a commodity.

When you are commodity then you get picked on price as everybody compares prices and so the key question is how do you differentiate yourself. So, it's very important that all companies in India start offering higher value-added services, otherwise you get end up in lower pricing segment.

Hence, our focus is how can we understand customer's business, his business challenges and to some extent help to redefine his business processes by using smart technology and smart platforms, which therefore can provide competitive advantage in marketplace. That's our focus and that's why Datamatics has chosen the path of looking at solutions that address customers' business, needs and challenges.

Our platforms and solutions are ideally backed by smart technology that can differentiate in the market place and allows competing on value-added services and not pricing alone.

Which are the verticals you are focusing on to drive business growth for Datamatics? Can you share how has been Datamatics’ business, both in the international and domestic market, during last few years?

We are strongly focused on publishing and research industry, BFSI, manufacturing and government vertical. BFSI is a crowded space as all competitors are there, while publishing and research is not so crowded and recently we started looking at the retail space, particularly the online retail, which again is uncrowded and we are getting very good traction there.

In terms of domestic market, we started looking at the domestic market in the last year and a half; and the response has been very encouraging and positive. We have signed up several new customers in the past one year. The domestic market is at the point of taking-off and in another 6 months or so the domestic market will be hot and from Datamatics' perspective it is very vibrant also. So in the domestic market we are focusing largely on manufacturing, telecom and BFSI verticals.

With focus moving from services towards solutions and products, what kind of strategy are you adopting to drive the business?

We acquired a company in the telecom billing space in Germany and that has gone very well. We have taken that product and modified it for smart meter billing and launched our new product - meter to cash or meter to bill - using the smart meter technology. Probably, we are the only one, or among the very few companies, in the world which have end-to-end solution for meter billing, which allows the user to have a dash board for real-time monitoring of the consumption of electricity, its source as well as the cost.

We have provided the intelligent meter billing for both individuals and corporates that allows monitoring of power consumption on minute basis, its source and cost that allows them to save the cost and consumption of power from different sources.

This can't be done by pure software or services but you need smart intelligent platforms that can talk to devices, power companies, corporates and individuals and give you real-time information. We have been talking to SAP, IBM, Microsoft and Oracle in Europe and have got some of them as our partners.

In recent years, the rupee has become stronger against dollar. Since Datamatics’ major part of business comes from overseas, has the rise of rupee against the dollar and the socio-political situation in US impacted your business?

There has not been too much of impact on our business. The reason is that a lot of our expenses are also in local currency, so when you earn in dollars and spend in dollars, the net impact is zero. It only impacts if you earn in dollar and bring it to India and convert it into rupees.

Secondly, our financial team has done a good job of planning and hedging that didn't impacted us. The business is looking better with the international markets, though it is yet to pull out of the economic challenges caused by the global economic meltdown.

Also the political statements made against outsourcing is an issue. But by and large we don't see any major trend of moving up or down as they are under cost pressure so there's more pressure to outsource more work to India. However, now they are looking at more values than just low cost. And India is not a low cost destination anymore.