US-based mid-sized technology consulting and services firm Headstrong Corp., that has two offshore development centres in India, plans to add back-office support, high-end analytic business process and infrastructure management services to its portfolio of offerings through acquisitions or by setting up divisions internally.
“BPO, KPO, production support, quality assurance and remote infrastructure management are some areas we can add. That will enable us to provide end-to-end solutions to our clients,” said Arjun Malhotra, chief executive officer and chairman of Headstrong, which is headquartered in Fairfax, Virginia. BPO is short for business process outsourcing and KPO refers to knowledge process outsourcing.
The move into these new business areas is part of global and Indian expansion plans of the company, which has revenues of around $200 million or nearly Rs800 crore, today. Headstrong currently focuses on financial services such as marketplaces, credit derivatives, mortgages, securities financing and wealth management. It also offers services to clients in the public sector, high technology and industries such as retail, health care and transportation.
The firm aims to increase revenues to between $500 million and $550 million in three years and has kept aside up to $150 million for buyouts in the period.
Wider focus: Headstrong CEO and chairman Arjun Malhotra.
“Over 2008 and 2009, we will be looking at making three to five acquisitions in the $5 million-$25 million range to address our gaps,” he said.
Malhotra, one of the co-founders of India’s fifth largest tech services firm, HCL Technologies Ltd, became chief executive of Headstrong after he merged TechSpan India Ltd, a firm he headed in India, with Headstrong Services Llc. in October 2003.
An analyst cautioned of integration risks in mergers of small- and mid-sized firms. “It is not easy for such companies to acquire and integrate,” said Sudin Apte, senior analyst and country head, India, for Forrester Research Inc. “Mid-tier companies need to carve out a niche in order to survive.”
Headstrong currently employs around 2,800 people globally and will recruit 200 by the year-end. In India, around 1,400 people work for Headstrong, 35-40% of whom are graduates from Indian Institutes of Technology and Indian Institutes of Management.
“(Staffing in) India is growing at around 40% for us and we are planning to take that to 50%. By end of next year, we will have 2,500 people in India which will go up to 4,500 by 2010. We are also setting up a development centre in Hyderabad in the first quarter of 2008,” Malhotra said.
Headstrong, which has offices in the US, UK and five Asian countries, bills about 30% of its revenues from its three offshore development centres in Bangalore, New Delhi and Manila. By 2010, its so-called offshore revenues will amount to between 40% and 45% of total sales, Malhotra said.