Xansa India heads for a major leap

Founded by Saurabh Srivastava along with a few like-minded friends in 1989, Xansa India has become a name to reckon with in the IT services segment. Shipra Arora profiles a company that emerged stronger from the throes of the economic slump

Xansa’s expertise in the application management space and IT outsourcing makes it well equipped to target the US market, says Padmaja Krishnan

It might be no Infosys or Wipro yet, but Xansa India (erstwhile IIS Infotech), a subsidiary of UK-based Xansa Plc, is carving a niche for itself in the services segment. Treading off the beaten track, Xansa decided to target the relatively untouched European market way back in 1989 when software companies were busy exploiting the US gold mine. Today Europe has emerged as an alternative to dipping business from the US. It was no crystal ball gazing but a simple spirit of innovation running through the entire organisation, says Padmaja Krishnan, director of Marketing & Business Development at Xansa India.

From IIS to Xansa

Xansa is scaling new heights now, but the going has not always been easy for the company. The period 1999-2000 and 2000-2001 saw a downward plunge in the company’s revenues and net profits. This was owing to a spate of acquisitions by the parent group UK-based FI Group PLc. (IIS was taken over by FI Group in the year 1998—the group made nine acquisitions since 1997, which adversely affected IIS’s performance.) However, gathering itself into a strong unit, a successful transition was made from IIS Infotech to Xansa India in 2001. This transition was triggered with the FI Group undergoing a consolidation and re-branding exercise. The re-branding programme involved all the nine companies under its fold, including IIS, being given a common identity. The need for integration and consolidation was felt to create a stronger and stable entity working towards a common cause, Krishnan points out. Having inherited a multitude of company names and brands through the various acquisitions, re-branding was a crucial commercial step to present itself as a unified international force. Xansa had to work towards the challenge of integrating divergent cultures, values, work practices, processes, management, etc. The efforts paid off. Xansa won laurels for undertaking a smooth integration exercise.

Global re-alignment

With the global realignment, Xansa India is ready to scale up on the solid foundation built through various acquisitions, which added a range of new services and expertise. This unleashed a major expansion drive for the company. A commitment of around Rs 160 crore in investments over the next three to four years in India was made in 2001. A roadmap for setting up three major software development facilities in Noida, Chennai and Pune in a phased manner, with capacities of around 1,500, 6,000 and 3,000 respectively was also proposed. While phase one of the Noida centre with a 550-person capacity is complete, and the Pune centre will take another 12 to 18 months, the Chennai centre will also be developed in phases. Phase one of the campus will be ready for occupation in May 2004. On the whole, the company has on its agenda the aim of achieving an approximately 5,000-strong workforce goal from present 1,200 by the year 2004. With this, India has become the main delivery point for the Xansa Group.

If investments are any pointers, the investment at Xansa is a reflection of the growing significance and criticality of the Indian operations to Xansa’s worldwide delivery capability and global plan. With the kind of investments being pumped into India, Xansa India is going to emerge as an important resource hub for Xansa and form a key element of its worldwide service provisioning model. This means a major leap for Xansa India—adding muscle to its existing operations. And as the blueprint translates into action over the next few years, it might herald the company into the Big Boys league in the Indian software industry.

Business areas

Starting with its flagship offering of application management, the company has, through its evolution, added expertise across various areas and is moving up the value chain. According to Krishnan, one of the key strengths of the company lies in its end-to-end business solutions delivery capability. The offerings of the erstwhile IIS included application management, software project consulting, development services, Web-enabling services and business intelligence services. With the transformation from IIS to Xansa, the company outlined new business areas, including high-end IT consulting, enterprise solutions and system integration as its new focus areas. Over the years, Xansa has evolved a robust bouquet of solution offerings, broadly ranging across four areas: Business and technology consulting, IT implementation, IT outsourcing and BPO. Under its business and technology consulting segment, the company defines strategies that address key business and technology issues and opportunities, designs and implements effective transformation programmes. The business consulting services extend across strategic and operational issues of business change. As part of this offering the company brings expertise in business and IT programme management, business performance improvement, organisation and people change issues, IT architecture sourcing, procurement and services management. Under the IT implementation umbrella, Xansa India provides a whole range of services including application management, application development, system integration, project implementation, enterprise solution, etc. With its end-to-end application management services the company designs, builds, integrates and manages large-scale systems, enterprise solutions and infrastructure. The solutions are delivered through an integrated on and offshore delivery capability. Xansa offers its IT outsourcing solutions through a spectrum of venturing and partnership models.

While IT will still be the flagship offering and will continue to drive Xansa India’s business, the company is betting on its BPO business to be one of the major growth drivers in the coming years. It has, in fact, been outlined as a strategic and critical business for the company. Many software majors like Infosys, Wipro, Satyam and Patni have all taken the BPO route in recent times for additional revenue streams in the currently prevailing sluggish market conditions. What calls for interest in Xansa India’s BPO venture is the fact that within two years of its inception this business segment has emerged as one of the mainstay businesses for the company. The company is targeting around 30 percent of its revenues from the BPO space in the next one year, which is quite significant. One of the factors that makes the company’s BPO initiative a strong bet is the BPO contract from British Telecom (BT), worth nearly £250 million, spread over a period of seven years starting from July 2002. BT has decided to outsource many of its key accounting and financial services to Xansa. The long-term contract will lend some stability to Xansa’s BPO business.

Presently a majority of BPO clients are its existing IT services customers but increasingly new customers are going for BPO services. Elaborating on the BPO operations, Krishnan explains that the company provides both inbound and outbound services focusing largely on credit card processing, HR, accounting and financing, customer service and back-office processing. The company has till date transitioned six key processes for its customers.

Market segments

After having established a significant presence in the European market, strengthening of its US presence is at the top of Xansa India’s future agenda. Presently Europe accounts for almost 85 percent of the company’s total revenues with the rest coming from Belgium, France Netherlands, the US and a very small chunk from APAC region. "We feel that there is still a lot of potential to be tapped in the US market. With our expertise in both the application management space and IT outsourcing we are well equipped to target this market. Our positioning is strong in that market," adds Krishnan. She further states that targeting the US market more aggressively will change the current proportions with a more significant revenue chunk coming from the American market. Going forward, the company does not rule out alliances and acquisitions to create a strong foothold in the US market. In terms of vertical segments the company will continue focusing on banking and financial services, utilities, retail, telecommunications, the pharmaceutical and aerospace segments.

One of the biggest strengths of the company has been its high customer retention rate. It has retained almost 55 percent of its customers over the last five years and close to 70 to 80 percent of them have been retained over the last four years. This explains the focus underlying all its services—strong relationships and partnership building with customers.

Amidst constant pressures on margins and dropping billing rates, the company is getting back on the high growth track, becoming the main catalyst for Xansa Group PLc’s growth. The upbeat mood is likely to be reflected in this year’s financial results which will be announced soon. With the base work done, it’s now time for the company to build upon the efficiencies and expertise added in the last few years. Through this, Xansa will be geared up for continuous growth in the future.