MphasiS marries Spectrum Software, The Economic Times

by SANGEETA KULKARNI

Software services and integration company MphasiS has entered into a memorandum of understanding with Spectrum Software, an Atlanta-based company for marketing services in the central US. The unique alliance is not just a marketing tie-up, and may develop into something more.

According to the arrangement between the two companies, MphasiS will absorb Spectrum's complete workforce of 25 employees in the US to form a joint SBU (Strategic Business Unit) called MphasiS-Spectrum.

The SBU will be headed by Spectrum Software's president Sarathi Srinivasan and will cater to a mutually agreeable set of clients. It is expected to give MphasiS an entry into application development in telecom and finance areas. MphasiS-Spectrum is expected to enable technical and marketing executives of Spectrum to leverage the size and capabilities of MphasiS.

Even as both the companies said that they were open to the prospect of single-digit cross-equity holdings of small amounts in near future, and that the current relationship could lead to a joint venture, MphasiS maintained that it had no intentions of acquiring Spectrum Software.

The association does not fit into the traditional business acquisition model, the software services and integration company said.

"The alliance will give us access to high-end senior technical people and is the preferred route when compared to an outright acquisition," MphasiS, chairman, Jerry Rao told ET.

"This could be described as a half-way house towards a joint venture, as we both are open to the idea but have no concrete plans in immediate future," Rao said. Spectrum Software is a 10-year-old company that undertakes systems design and consulting projects in multimedia based software products for clients such as AT&T and Eaton Corporation.

Spectrum has been working with MphasiS for a while as a supplier of software services to Spectrum's clients.

Spectrum, however, will share a non-exclusive relationship with MphasiS and will not be restricted to any geographic area for operation.

The alliance is only meant to to strengthen the existing relationship between the two companies and to avoid sub-contracting for clients, say officials. Spectrum will provide the marketing front for MphasiS' key clients, while MphasiS would have access to the Central US geography, with a minimal amount of overlapping of services rendered by the two companies.

The MphasiS BFL Group, inclusive of its subsidiaries, reported a consolidated net profit of Rs 9 crore for the quarter ended September 30, 2001, compared to a net loss of Rs 2.2 crore during the same quarter last year.

On a stand alone basis, MphasiS had a net profit of Rs 11.4 crore for the quarter ended September 30, 2001 as against Rs 4.1 crore in the same period last year.

The company provided Rs 2.4 crore as a one-time charge during the quarter towards restructuring costs related to closure of the company's European operations including the closure of the healthcare product line.

The restructuring costs comprise staff costs, lease costs and accounts receivable.

 
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