Zensar Tech expects digital to hit over 50% revenue in 2-3 years

- The Economic Times

News | 18 Dec 2017

Dec 18, 2017: Zensar Technologies the IT services company from the RPG Group, has pruned the list of its smaller and non-scalable clients to focus only on those who did more deals in the domain of cloud, analytics, customer experience and cyber security, CEO and MD Sandeep Kishore told ET.

The company now expects digital to contribute more than half of its revenue in 2-3 years against 37% at present. The average digital deal sizes will also triple to $10 million plus from $3-5 million currently.

"We took a conscious decision to prune our list of clients wherever we didn't see a strategic fit," Kishore said. "We identified a list of more than 50 clients when I joined and we are almost done with that pruning. Very little is left."

"Our focus is we must only do work with companies with whom we can add strategic value in digital, cloud, analytics, customer experience, cyber security. We must be relevant to each other," he said. The impact is starting to show in company's quarterly results. The number of $1million plus clients in Zensar's portfolio has grown to 70 from 65, and in the $5 million plus category, it has doubled to eight in the last eight quarters. The top 20 clients now account for 56.1% of the company's revenue, compared with 52% in the third quarter of 2016.

Kishore said the company will continue to implement this strategy as it acquires new companies.

Pune-based Zensar has acquired retail tech firm Keystone Solutions and user design firm Foolproof in the last one year for an undisclosed amount.

"The spending environment is very good but it is happening largely in digital stacks. In almost all sectors — retail, financial services, healthcare, telecom, manufacturing — all of them are spending 80% of their investment dollar into digitalled technologies," said Kishore.

More than half of the new deal wins are in the digital, he said, adding that digital revenue has grown 56% CAGR in the last two years. The company will continue to grow digital revenue organically and through acquisitions.

"We are an acquisitive company. Our acquisition strategy is tuckins. These are $25-75 million deal sizes to add new capabilities. We have identified set of 12 areas around digital in retail, finance, manufacturing," he said.

IT firms are increasingly relying on digital deals to keep up the growth momentum as the sector struggles with structural changes to the way it does business. The IT industry is moving away from the commoditised nature of services towards automation, robotics, machine learning and artificial intelligence.

Indian companies are competing with larger global rivals including IBM and Accenture for a bigger share of the outsourcing business.

The company reported a 33% jump in consolidated net profit at.`64.19 crore for the quarter to September 2017 on the back of strong margin expansion. It had posted a net profit of Rs 48.08 crore in the previous quarter. Its revenue from operations rose 4% to Rs 762.6 crore in the quarter.