Feature

To buy or to be bought

Zensar is doing well for now, but it could face problems common to mid-tier IT companies in the future

Photographs by Soumik Kar

Why should we talk to you?” was the ominous question Ganesh Natarajan faced at the start of a meeting with a very senior official of a large retail chain in England. Natarajan, vice chairman and CEO of Pune-headquartered Zensar Technologies, remembers the great lengths he travelled to get the appointment in 2004.

“I had almost anticipated the question,” he recalls. “I told him that all we wanted was a chance to provide them with IT solutions — we were even willing to offer our services for free. That client eventually did give us the chance and they are still with us.” 

Niche play

Zensar is betting on infrastructure management to drive growth

Source: Company Zensar is viewed more kindly by the international markets these days. After all, it has ramped up revenues to ₹1,782 crore in FY12, from a base of ₹606 crore five years ago. But then, that is still small when compared to the big three Indian software firms that clock an average revenue of ₹40,000 crore annually.

The aspiration for this RPG group company now is to get into the big league. Zensar hopes to become a billion-dollar entity — thrice as large as it is today — by FY16. To do that, Zensar will have to grow at a CAGR of 30% all the way, admits Natarajan. Zensar hopes to end this fiscal (FY13) with a growth of 20%. Which means, the company will have to look at acquisitions in the future.

“We plan to make a significant acquisition in the US market in 2015, and that should add $150-175 million to the topline.” The proposed acquisition aside, Zensar itself has been rumoured to be acquired several times in the past few years. It’s not happened yet. But with every passing year, the case is only getting stronger. Unlike a few years ago, growth for most companies is coming at a higher cost now. While there is cost push because of higher wages, clients are also driving down billing rates, thereby depressing margins. That is making it imperative for companies to scale up — and acquisitions are an easy solution — to better your odds in the dogfight for business. So will

unsub

You don’t want to be left behind. Do you?

Our work is exclusively for discerning readers. To read our edgy stories and access our archives, you’ve to subscribe