Silicon Valley-based Persistent Systems has launched a dedicated business unit called 'Accelerite' that will align its business strategy towards products and intellectual property based on the social, mobility, analytics and cloud (SMAC) platform.
"We believe that products and product development services need to be managed differently and customers need to view these as different business lines," the firm's CMD and CEO Anand Deshpande told CNBC-TV18 in an interview. "We are taking some of our IP revenues and putting them into the Accelerite brand and all our products will be branded as such."
Deshpande also spoke about the commentary that has come from top Indian IT companies such as Infosys and TCS recently who said growth in fourth quarter would be relatively muted.
"I would not read into it as a long term trend," he said. "Most people are projecting a lower Q4 but overall the trend is good. The market is shifting and people are buying new technologies and solutions so growth is expected in the future."
He added that most of the company's business (about 85 percent) comes from North America and so he was not concerned about a perceived slowdown in the Indian IT space, a factor alluded to by TCS at its recent analyst call.
Persistent has been focused on new technologies such as cloud computing, mobility and analytics and is seeing a lot of activity and new deals getting signed, Deshpande said. "These deals are small in size but are signed with large companies and last for a long time."
The company's nine-month dollar revenue growth stands at 14.6 percent while its targeted full year margin is 24-25 percent.
Below is the interview of Anand Deshpande, CMD & CEO, Persistent Systems with Ekta Batra & Sonia Shenoy on CNBC-TV18.
Ekta: You have also setup a business unit to focus on your product segment. Can you take us through that news?
A: We announced this today that we are creating a business unit called Accelerite and the idea there is that we believe that products and product development services that we do, need to be managed differently and also customers need to view them are two different business lines. Therefore, we are taking some of the our IP revenue where we are responsible for selling those products into this brand called Accelerite and all the products that we do will get branded as Accelerite products and that way we will have the ability to compete as a product company which Accelerite will look and feel like when we are competing with other product companies in the market.
Sonia: Before coming to specific performance of Persistent, I wanted to get your view on the commentary that we got from some of the bigwigs like Tata Consultancy Services (TCS) and Infosys where Q4 might be a slower quarter than earlier expected. Are you getting a sense that perhaps the growth for the entire sector could slowdown or is it just a one or two company specific worry?
A: It is hard to say exactly what has happened for the entire sector. However, most people are projecting potentially a slower Q4 but overall the trends are very good. The market is shifting so there is a lot of activity in the market, people are buying new technologies and solutions, so there is a lot of growth expected in the future but as the market moves from what we use to do to what we are likely to do – there is likely to be some changes in between, so that is the reason why people are projecting a slightly slower Q4 but overall I would not read too much into it in terms of long-term trend.
Ekta: One of the key things which were brought up by TCS in their analyst call or analyst meet was that India has been quite a volatile geography for them and that is one of the reasons why the guidance for Q4 might be lower than what they were anticipating. For Persistent Systems how much of your revenue is dependent on the India region and what is the region looking like. Is there any sort of volatility in the market that you are facing?
A: Almost 85 percent of our business comes from North America. We have a very small percentage of business from India. Therefore, we are not subject to the changes that we see in the Indian market. Most of the business is directly coming from North America for us.
Sonia: When you say that Q4 could see slower growth, what could your constant currency growth look like not just in the revenue front but also in terms of volumes because last quarter you did about 3.5 percent quarter on quarter, volume growth? How much could that slowdown to?
A: It is not like we are projecting a whole lot of slowdown in terms of Q4 but I do not want to say what the exact number might be but it is in the same range as last quarter or little lower than that but not by much and there should be volume growth. We are also expecting intellectual property (IP) growth this quarter. We do see that some of the businesses that we have done traditionally are changing and there is a shift in the kind of business that we do as we look forward. The outlook though is very positive in the sense that we are seeing good opportunities, good pipeline growth and many good interesting deals getting signed.
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