Chennai: Software company Ramco Systems Ltd is firming plans to expand into the African and West Asian markets in 2010-11 and enter domains such as healthcare and education, a top executive said.
Chennai-based Ramco returned to quarterly profits in 2009 after about seven years of making losses. The expansion now would boost the firm’s revenue by 35% and profit by around 70% in the next fiscal year, chief operating officer Kamesh Ramamoorthy said.
For the quarter ended 31 December, Ramco posted total income of Rs42.29 crore and net profit of Rs0.36 crore. In the fiscal year ended 31 March 2009, it reported an income of Rs195.29 crore and net profit of Rs2.02 crore.
“Under good times, we would never have imagined to have done this (returned to profits),” said Ramamoorthy, explaining that the slowdown in developed markets forced the firm to explore partnership models and new geographies. “Now it is all about how do we really get to those levels of good profits, mega profits and good revenue growth.”
Ramco has around 30 partners in India to implement its software as a service model—Ramco OnDemand ERP—and plans to increase this to 100 by the end of fiscal 2011.
In the next two-three years, Ramco wants to enter underserved markets that have been left relatively unharmed by the global depression, such as Ghana, Ethiopia, Yemen and Brazil, as well as developed nations such as the UK.
To do this, it plans to enter into strategic alliances with small companies in the region that would strike deals for Ramco’s products and services.
Under this arrangement, the local company would get a percentage of the revenue from the customers, and implementation costs. Ramco is currently scouting for partners in the UK, Brazil, Tunisia and Utopia.
“It is a risky proposition (Ramco being a software products company),” said Diptarup Chakraborti, principal research analyst at the India office of technology researcher Gartner Inc. “(But) because it is risky, it is highly profitable. Once you turn the corner, you go on making profits,” he said, commenting on products companies in general as he does not track Ramco Systems specifically.
Ramco is looking to focus on government projects and e-governance in the African countries, and on enterprise resource planning (ERP) products for small and medium businesses in West Asia.
In Europe, Ramco wants to sell ERP products for midsize companies, with a special focus on manufacturing businesses, and its focus in the US would be on outsourcing of managed services and aviation, said Ramamoorthy.
The company, so far focused on sectors such as banking, financial services and insurance, also plans to enter the healthcare and education segments by co-creating products with other firms. It is already working with the International Institute of Information Technology, Bangalore to create campus management and student administration packages.
Ramco is also in talks with a few US-based companies for co-creation of products. Ramamoorthy declined to name the firms as the talks are in early stages.
He said Ramco’s strategy was to look at sectors with high growth potential over the next two years.
“While we don’t have a 100% product for this (healthcare and education), the idea is to co-create a product with someone who is already there. Because of the strength that we have, we can create solutions around standard products,” said Ramamoorthy.