A LONG road ahead for MphasiS BFL, the software services company
that calls itself an interactive integrator. The company aims to
touch the magical Rs1000 crore revenue figure. A figure that will
catapult it from its current number 20 slot on Nasscom's Top 20
software domestic exporters (2000-2001) list to be among the top
six. MphasiS BFL's revenue last fiscal was Rs 290 crore.
Rao, chairman and CEO of MphasiS BFL, and Jeroen Tas, president,
are not unduly worried. Size (read revenues) is important, but the
goal is not that alone, according to them.
"We may not be the biggest software company. But we could be the
biggest solutions company in the financial and logistics vertical,"
says Rao, who prior to founding MphasiS, headed Citibank's technology
development and its global electronics cards division. Rao adds
that the aim is not to scale across, but within. "Size will follow,"
This singular focus on financial and logistics vertical is what
will see the company gallop ahead, Rao feels, and cites two specific
reasons for his optimism. One is the technology spend of this segment
and the other is the core competency in this segment.
Finance and logistics are large verticals, which have several sub-verticals
within them. In terms of technology spend, the finance vertical
spends more than the retail and manufacturing put together. Says
Rao. "The business opportunity is big. The top 20 banks in the world
spend $40 billion annually on technology, of which 50 per cent goes
towards developing application software."
As the trend in the corporate world is more towards buying components
and integrating them, the integration skills that MphasiS BFL has
will surely help, he says.
to the new business model is effective integration, says Tas, citing
banks as an example and the urgent need felt by them to integrate
their credit card, investment, home loan and several other offerings
internally and between banks to give their clients personalised
attention. In other words, services that will help them outdistance
strong belief in integration and the remarkable wonders it can do
to managing customer relationship is what encouraged Rao and Tas,
who in many respects show marked contrast with each other, to found
MphasiS in 1998 in California. The company later acquired BFL.
says that he, Tas and colleagues at Citicorp were convinced there
was a tectonic shift in technology, with people managing customer
relationship suddenly realising they had the technology available
to do things that everybody wanted to do for years but could not.
"It was not just the internet, but the technology underlying the
internet that made it possible to take messages across multiple
legacy system to create one unique customer profile," he says.
admits that the US slowdown has hit the company pretty hard, with
several clients cutting back on spending. But he hastens to add
that the relationship with them is still good. "We have to wait
this out. When the spend comes back we'll be ready," he says, explaining
that adequate cash, focus on quality and intense sales efforts are
enough to see companies through the current difficult patch.
Tas says that in every corporate boardroom the
oft-asked question is whether the company is getting full value
on its IT spend. To get most bang for the IT buck, companies need
to integrate their business processes and make their IT (specifically,
the system development lifecycle) the most cost-effective. To do
this, they need to build systems not from the top down but start
with business processes. MphasiS BFL, he says, has realised this,
which is why it is able to attract some of the blue-chip firms.
BFL follows a new business model under which complex projects get
done by virtual teams operating in different locations (large chunk
being in India) and which are tied together through collaborative
of this model, says Tas, is that clients can see how their project
is taking shape by logging on to the project room of these virtual
teams. "In this model, as the project in the strict sense stays
with the client, they are lot less reluctant to have all their critical
development moved out of their doors, " he says.
on high end development work is what most software companies would
like to talk about. It is the same with MphasiS BFL too. Rao says
that for a leading bank in Japan, a complete new highly complex
distribution system was designed and architected. The project involved
integrating a new retail banking distribution system with CRM system
at branches and call centres and tying them up with various banking
back end system, through a transaction hub. A portal too was developed
which linked both the call centre and the back end system.
to Rao, executing such kind of high end work insulates the company
from price pressures, and gives it the ability to go up the value
chain with customers. He however is quick to point out that one
of the issues with this business model is that, being project dependent
it suffers when projects get cancelled in times such as these.
a greater annuity revenue business, MphasiS BFL has formed a company
called MphasiS BPO, an e-services fulfilment company headquartered at
Santa Monica, California, with operations in Bangalore. This company
does IT-enabled services like inbound and outbound solutions, and
backend transactions. The company is also considering a foray into
software migration space — yet another regular and consistent-income
highly lucrative financial and logistics space that the company
targets, competition comes from big consulting firms like EDS, Accenture
and Sapient, and some Indian domestic vendors.
understand the processes and technology as most of us come from
this [financial] space. We operate at a fraction of the cost of
the big five. While a lot of Indian companies are moving up the
value chain, we're already there in the middle," says Tas.
that acquisitions will be considered. "We will not pick up small
companies to do aggregation. Unless there's a compelling synergy
and meaning, we will not look at acquisitions," he adds
BFL's strength lies in its domain expertise, strong integration
skills and building intellectual property in messaging components
and framework. Its weaknesses, says Rao, are those which are inherent
of any young company.
potential for the company, which has a manpower of around 1500,
is huge. Rao is confident that when the ominous shadow of the current
slowdown clears up, the company will move ahead much faster.