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MphasiS plans acquisitions for growth
Times news network [Tuesday, December 07, 2004]
R Subramanyam / The Economic Times

BANGALORE: MphasiS BFL is keen to complete a couple of acquisitions to accelerate growth. This mid-size software service exporter, which so far has made two acquisitions in India, said that it is looking at both the domestic and overseas market to buy small software firms.

“We are seeking a couple of small companies in specific domains such as banking and healthcare,” Mr Jerry Rao, chairman and CEO of MphasiS BFL group told ET.

Like many other software exporters, MphasiS is keen to grow revenues and enhance its offerings through acquisitions. To gain SAP implementation expertise it purchased Ondia Infotech and later took over Kshema Technologies to benefit from embedded (software and hardware) system offerings.

Although there are numerous companies looking to merge with a bigger entity, the process of identifying the right company is a painstaking task said Mr Rao, adding that the hit ratio is around 40:1.

While half yearly revenue and profit growth has been encouraging, the group’s revenue from software services has in the last few quarters been sluggish. It hopes to correct this through its acquisitions strategy.

Mr Rao said that he is very optimistic on the advisory service, a new offering that the group has ventured into. MphasiS will help captive BPO firms set up and run their operations in the country. It will also develop software IP (intellectual property) that will assist these captives to effectively run their operations.

The advisory service, he said, is not restricted to India and can be taken to other countries where clients wish to set up their captive BPO units “Unlike others in our space, we are not looking at captives as enemies,” said Mr Rao.

The integrated software and BPO capabilities that MphasiS has, is its strength in the competitive services landscape said Mr Rao. To illustrate his point he said that an MNC client having a BPO facility in India and working with partners across the globe would like to have a common platform through which it could manage it outsourced operations.

“We have the capability to provide this. The need for such an offering has come with global redistribution of work happening,” he said.

MphasiS group made Rs 368.80 crore in revenue and Rs 66.80 crore in profits in the half year ended September 2004.