Chennai: Polaris Software Labs Ltd, a mid-sized software services firm that earns most of its revenues from banking and financial services customers, is exploring buying a stake in or entering into a joint venture with a consulting company to plug a gap in its service offering, Jaideep Billa, the Chennai-based company’s chief technology officer, said.
Consulting assignments are increasingly becoming part of software service contracts and, often, such business is the starting point for larger projects with global financial powerhouses.
Billa said Polaris will fund the acquisition or joint venture through its cash reserves, which at the moment stands at $25 million (around Rs101 crore). The Polaris CTO declined details of the targets it was evaluating.
At present, 11 of the world’s top 25 banks use at least one module or offering of Polaris’ flagship banking and financial services product, branded “Intellect”.
The Intellect suite covers seven core areas of banking, including corporate banking, retail banking, insurance and wealth management. In addition, Polaris offers maintenance and support through its business process outsourcing division and offers regular IT services as well, but has business consulting services missing from its portfolio.
Polaris would look at partnering with a company such as McKinseyand Co. or Boston Consulting Group, albeit, much smaller in size than these firms. “We are looking at one or two companies in slightly more specialized verticals, because that has been Polaris’ approach to entering the market up to now”.
Billa said top banks prefer to have their entire tech infrastructure run by three or four vendors rather than by 20 different firms. “When banks are consolidating their vendor base, why would they choose a mid-tier company from Chennai, unless that company has a differentiator?” he asked.
Intellect competes with other successful software products developed by Indian companies such as Flexcube by i-Flex Solutions Ltd and Finacle by Infosys Technologies Ltd.
However, those two companies have advantages over Intellect—i-Flex because its buyout by Oracle has lent it tremendous legitimacy among large banking corporations; and, Infosys, thanks to the relationships that it has established with banking and financial companies over the last decade or so, said Alok Shende, director of consultant Frost and Sullivan’s tech practice.
Polaris ended 2006-07 with a revenue of Rs1,032.37 crore and net profit of Rs101.06 crore. Shares of Polaris closed at Rs148.7, down 0.90% on a day when the Bombay Stock Exchange’s benchmark index Sensex rose 38.50 points to 15311.22.