Less than six months after taking over as the CEO of CitiusTech, Rajan Kohli, a former Wipro veteran, is busy finalising his vision for the healthcare-focused IT services company to double its revenue to $1 billion over the next five years. Acquisitions to build new capabilities and expand will be a key component of the plan, Kohli said.
Founded in 2005, CitiusTech is currently expecting to clock in $500 million in revenue in FY24.
In his previous role at Wipro, Kohli led a team of over 100,000 employees and a business vertical with a revenue of more than $6 billion. He was the president of Wipro’s Integrated Digital, Engineering and Application Services business (iDEAS).
At CitiusTech, Kohli believes that growth will come from a few specific areas including existing accounts, the growth headroom that the healthcare sector provides in key markets like North America and the company doing its own business application development, cloud and data. CitiusTech has also made some acquisitions which will enable it to start new services, Kohli told Moneycontrol.
He said, “We have 100 plus good accounts, which for a company of our size is a very good spread. Compared to other companies which are small and medium sized, have huge exposure to only two or three clients. We don't have that. Of course, our top five clients have a large share, but we have a base of 100 plus clients that gives us the ability to sell into those clients.”
“Overall growth is going to come from existing accounts, new accounts, more infusion of digital spend by our clients and some new service lines,” he added.
Speaking on the headroom from growth in a domain-focused company, Kohli said that healthcare is the second largest segment in North America after financial services. CitiusTech currently has about 1 percent share of the overall spend in the market.
“We have huge room for growth. To double our size over the next five years, we have to gain only 0.1-0.2 percent more market share, because there's going to be new spend in healthcare. So we just have to get our market share increased from 1 percent to 1.2 and just go with the market to get to a billion dollars,” he said.
He added, “Also, the timing is right. Everybody says that healthcare in North America needs a lot of investment and digitisation. So this is the right place, the right time, I feel five years later, or five years earlier would not be a perfect time. Because five years back, the market wasn't ready for this much digital inclusion.”
Acquisitions and expansion
CitiusTech will also expand into newer geographies including into delivery capabilities in Eastern Europe, majorly around life sciences to give exposure to global clients in the US.
Further, acquisitions are going to play a major role in the company’s growth story as it will add new skills for them, he said. For instance, CitiusTech acquired FluidEdge Consulting in 2020, to gain consulting skills.
"We may do an acquisition of a set of clients also, but it’s mostly acquiring for capabilities,” he added.
“We will go after companies with about $25-million of revenue that would be a sweet spot. If it's smaller than that, it will not be very meaningful. But we can always look into larger companies if it is a very good strategic fit,” he said.
Over the next five years, to achieve its roadmap, Kohli said the company’s main focus in terms of acquisition opportunities will be on capabilities in cloud, data on cloud, or specific purposes like acquiring a life sciences asset in Europe. And then lastly, with its new services like Salesforce, he will look for assets to grow fast.
CitiusTech had acquired Wilco Source, one of the leading providers of Salesforce consulting and implementation services, in November 2022. Kohli expects the Salesforce business to become a $100-million vertical, once CitiusTech reaches $1 billion.
While the company is looking for acquisitions, Kohli will wait for the valuations to correct more.
Kohli said, “There are several conversations going on (for acquisitions). The good part about private equity backed companies is we don't shy away from M&A. We are waiting for the valuations to drop a little. I think while the market has fallen, the valuations don't seem to have fallen to that extent, so we're waiting for them to correct a little bit for us to get more active.”
CitiusTech’s private equity investors include Bain Capital and BPEA EQT.
Focus on generative AI
CitiusTech also launched its healthcare-grade generative AI solutions suite Re-imaGen AI. As of August, the company is working on over 100 proof of concepts and experiments around generative AI.
While the company is helping clients with automating their processes and improving productivity significantly, it is also implementing these solutions internally to improve coding capabilities.
Kohli said, “Generative AI will be more than a plugging feature, it will be the way the work gets delivered. If it's not the way of life the work gets delivered, and if it will be only 10-15 percent automation, then you will fail.”
“The results we are seeing are very superior, like 300-500 percent improvement in certain pieces. Now, if I look at the end-to-end lifecycle, it may be 30-40 percent productivity improvement, but in certain phases for certain pieces of code, I could get 300 percent improvement. So we have to look at it as a breakthrough innovation, and not just an incremental innovation,” he added.
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