Feb 23, 2010
Upinder Zutshi, CEO of Infinite, expects the firms future growth to be driven by remote infrastructure management as well as IP-leveraged solutions - R Samuel
Feb 23: IT services firm Infinite Computer Solutions is testing out new business models that could be crucial to future growth and profitability. Ina re-set world post the recession, old equations of more people equaling more revenues may no longer hold true.
The firm, for instance, has entered into a strategic alliance with Motorola to develop and support its software enabled messaging products - SMS (short message service) and MMS (multimedia messaging service). Infinite will acquire a non-transferable, royalty bearing worldwide license to Motorola’s messaging product solutions.
The firm can now develop an application product that that will be sold as a licensed implementation back to Motorola, its clients and thirds parties. While the IP of the licensed messaging product will remain with Motorola, Infinite will retain rights to the IP of all add on software that it develops.
While Upinder Zuishi, CEO of Infinite, refused to comment on the modalities of the alliance, the BSE website which was informed of the alliance today, says the alliance came into effect from February 1, 2010. It says both Motorola and Infinite will share the revenue from the provision of the messaging platform service in a predefined revenue sharing model – the revenue to be shared consists of an annual support fee and capacity licenses.
As per Infinite’s projection, which is based on currently available data, its share of revenue in FY 2010-11 from this alliance is expected to be around $ 20 million and upwards of $ 40 million in FY 20111-12.
However, analysts say that the total deal value maybe significantly different from the current forecast range. This is because a large part of the revenue for Infinite will be derived from the sale of capacity licenses, which is based on growth of customers and messaging usage patterns in the future.
The revenue sharing deal with Motorola is in line with Infinite India’s growth strategy to shift form its traditional ‘Time and Materials’ business models where risk and margins are low to the higher risk higher margin ‘Fixed-bid’ model.
“Currently, 80% of our business comes from the Time and Materials revenue model and revenue share contributes a mere 6-7 percent to our total business. Ourfocus will remain on high margin business models in the furture and the Motorola alliance is just the beginning” said Zutshi.
The company announced Q3 results in the city today. Revenue increased marginally by 1 percent to USD 34.5 mn compared to the second quarter; net profits increased to USD 4.4 million in Q2.
The company added 689 (254 net additions) people on a gross basis during Q3, taking the total people strength to 2902 as of Dec 31, 2009. Plans are on to hire 300 plus laterals in Q4 of which 150mpeople will be Motorola employees, as a result of the new alliance. The company has acquired 4.5 acres of land in Hyderabad where it will build a new campus over the next 18-24 months. And plans are on to expand its Gurgaon facilities from a 260-seater to a 500-seater.
Positioning itself as an alternate service provider to Tier I services company in India, Infinite expects its future growth to be driven by RIM (remote infrastructure management) as well as IP-leveraged solutions. Besides telecom, which is the largest vertical it services, the company is focused on emerging verticals such as Healthcare, Media, Public Sector and Energy & Utilities.
“Growth will fundamentally be driven by our existing client base, of which 13-15 have the potential to grow to $ 50 million. Additionally, substantial revenue/margin growth will come from infrastructure management and IP solutions for existing customers” said Zutshi.
What about acquisitions? “We will look at it only to acquire revenue generating IP, like our COmnet acquisition. And we will continue to build a revenue model around IP” he added.