Widening mkt in Middle-east, India, Asia Pacific: Thinksoft

In an interview to CNBC-TV18, Vanaja Arvind, Executive Director of Thinksoft Global Services says the company is now widening its business, which has a major market in Europe, to Middle East, India, Asia Pacific, mainly Singapore and Hong Kong as well as Australia. "We have added 12 new clients in the new geography which will help us accelerate business," she said.

Arvind says that although the business in Europe is doing well, the company faces a challenge in adding new business. "The Europe revenue which was almost about 56% earlier has come down to 47% this year," she further added.

Below is an edited transcript of Vanaja Arvind's interview to CNBC-TV18. Also watch the accompanying video.

Q: Could you tell us how Europe is doing for you What is the company doing with respect to growth over there and any plans to diversify?

A: In Europe our existing business is doing well. There is a challenge in adding new business though there is more inclination towards outsourcing but as part of strategy last year anticipating Europe remaining flat we widened our geographical reach, so we added new region for that. Hence, our risk is coming down and the Europe revenue which was almost about 56% earlier is come down to 47% this year.

Q: What sort of geographical diversification have you then undertaken in order to reduce your exposure to Europe?

A: Both Europe and US were the focus area earlier but now we have thought of widening our geography to middle east, India, Asia Pacific mainly Singapore, Hong Kong as well as Australia. We have opened a branch in Cyprus to care of near shore center for the European region, to bring the cost down.

Q: Give us a sense of what sort of contribution we could see in percentage terms possibly in FY13 for the company?

A: We don't give forward guidelines but based on first two quarters, it will be on the similar lines. We have done good growth in the first two quarters, the revenues stands at Rs 5,800 crore and profit at Rs 5.7 crore compared to Rs 1.8 crore, last year and onsite offshore mix is also changing, it use to be 30:70; its coming down to 27.73 because of which the cost will come down and that will reflect in the margin. We have added 12 new clients in the new geography which will also help us to sort of accelerate business.

Q: Some time you had announced partnership with Nastel's Technologies. Will there be any revenue contribution on account of this tie-up in this fiscal year or maybe even in FY13?

A: The announcement was made about couple of weeks back and it's too premature to talk about it. We are working together to new opportunities so either we will close it for this fiscal year or opportunities will come for next year.

Q: You also indicated in your earlier answer that the contribution of Europe is coming down significantly on account of diversification but is it also because you are perhaps seeing some de-growth and hence the revenue contribution has come down. Can you give us a number and the kind of growth you are seeing in Europe?

A: In Europe, the decision making cycles are much longer now. The US went through similar one last two year because the budget cuts and the prioritisation, IT budgets are getting slashed because of the cost cut and decision making cycle is much longer for them to say that they should place their money.

Similar action is happening in Europe and that is taking longer. Hence, we did the geographical diversification as well as over a period of time reduce the onsite and increase the offshore mix so that European customers are also comfortable with the cost advantage.

Q: We understand that you are possibly would be looking at some amount of inorganic expansion as well, take us through anything on the cards and even the quantum you willing to shell out?

A: We are looking for a USD 5 million companies possibly in US or in India which we could invest and which has a complimentary services offering similar to ours and Thinksoft is a pure play testing company, will not look at development. Hence, we are looking for similar profile in the range of USD 5 million to see whether there could be an inorganic growth for the company, in addition to our organic growth.

Q: Will the acquisition take place in this fiscal year?

A: Not likely, it will take little longer.