Kevin Kenedy, President & CEO, Avaya Inc, is betting big on India. In an interview to CNBC-TV18's Shereen Bhan, he says that FY15 will be an important year for the company's growth in India. While India is the largest epicenter of R&D for Avaya, the geography has also been the center of change for Avaya transitioning from the IT product side to the software services side. He expects a double-digit growth in FY15.
Below are excerpts from the interview:
Q: In the context of a new government and growth recovery in India, how confident is Avaya about growing in the Indian market?
A: We are very excited and it is not just a state of hope, it has actually happened to us. We organise India underneath our global growth markets leader. Over the last several quarters since we have seen double digit growth quarter-over-quarter in our mid market which is one of our new initiatives, I believe we are execution bound and are seeing the positive ramifications of altering our execution. The GDP will continue to grow which will hold great prospects in future years. There is nothing but upside for us at this point.
Q: How much India contributes to your global revenues at this point in time? If I were to look at your geographical breakup, the US is the lions share, 50 percent of your revenues come from the US and about 11 percent from Asia-Pacific and the emerging markets contributing about 29 percent. Where would India stand in the Asia Pacific or the emerging market basket for you?
A: India would be representative of a single digit percent number in terms of absolute value of our revenues. But in terms of growth it would become increasingly a larger percentage. So right now I am focused on growth for the company and that is why we are investing in India.
Q: You have a fairly large research and development (R&D) facility here in India spread across Bangalore and Pune. It is your largest R&D facility outside of the US. Can you take us through the incremental investment plans for the Indian market?
A: We do have R&D both in Bangalore and Pune and actually some services in Hyderabad as well. India does represent the single largest epicenter of R&D for the company and therefore, plays a global role. Our revenues and bookings will grow double digit. You will continue to see us grow our operational footprint as you would suggest our R&D with the same kind of growth rate. We have had an excellent execution team on both the services and R&D for a long period of time and it just makes a lot of sense for us to continue growing that footprint.
Q: What will the focus as far as R&D and innovation in India is concerned? What kind of hiring plans do you have for FY15-FY16 in India and what about the incremental investments in India?
A: A double digit growth in terms of the talent that we track with the revenue growth. Our plans are to continue to keep this as a software and services centre which it has been.
India has contributed tremendously as we have transformed the company from a hardware company to a software and services model. India is actually a beacon for that transition and we will continue to keep it as such. I will invest not only in terms of our operational footprint but even to the extent that there are merger and acquisition dollars to be spent if we see companies that we can invest in.
Q: You spoke about tucking in acquisitions to plug the gaps in your current portfolio, what kind of opportunities are you looking at, have you been able to identify anything as yet, what kind of war chest are you working with as far as your M&A plans go?
A: The primary areas of scouting would be in the services side especially services as it relates to what is really a new initiative for us on the mid-market. There is nothing but upside on the mid-market because it is new. We have a totally reinvented products line for that market and India represents unbounded opportunity for that.
Therefore, mid-market based services organisations would be one. The second is software based applications that play to our strength in the contact centre, social media and cloud oriented deployments of technology. Those are the two areas that we are scouting actively at the moment.
Q: What kind of budgets are you working with?
A: We tend not to share that but certainly many tens of millions of dollars which for any one particular transaction.
Q: Are you hopeful of being able to close anything in India in this financial year?
A: You never know and once you find something, it often takes quite a bit of time to bring it to fruition. So, it's very hard to estimate when things will close. It would be excellent for us to be able to find something that we begin to lock on and engage for closure sometime in 2015 at the latest.
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