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These five companies account for barely Rs 1,266 crore of the Rs 62,134-crore IT industry. But in Indian IT’s worst year—when the industry grew by just 14%, against the previous year’s over-65% growth—these five companies registered over 100% growth (see table). Given that the base for revenue growth in these companies is small, the significance of their success is limited. However, considering that a majority of smaller players found it extremely difficult to sustain themselves in the year of the downturn, their performance is creditable. So what is it that Moser Baer, RMSI, IS3C, Orbitech and Axes Technologies have in common and what were the factors that contributed to their success?

Except for Orbitech, which saw a significant increase in revenues on the domestic front too, a major chunk of the revenues of all these companies came from exports. In fact, the domestic revenues of iS3C Consultancy Services were down by 51% last year. But domestic revenues of just Rs 48 lakh, against export revenues of Rs 121 crore did not affect the company’s finally tally in 2001-02. Overall revenues still jumped from Rs 52 to Rs 121 crore.

The Strom Busters IT companies that showed over 100% growth in 2001-2002

And except for Moser Baer, all these companies operate in the software exports segment, which incidentally registered a growth of just 20% this year (excluding ITeS). RMSI for instance, has 100% of its revenues coming from the off-shore (India-based) business. The company says it created a relatively risk-free business model by staying away from the ‘body-shopping’ on-site model. Just Rs 83 crore of Moser Baer’s revenue comes from the domestic segment and Rs 595 crore comes from hardware exports. Incidentally, for Moser Baer, even the the growth in the domestic market was 241%.

Despite the high revenue growth, the number of employees these companies added this year is proportionally low. RMSI grew from 646 employees in 2000-01 to 681 in 2001-02. Axes Technologies too added about 100 employees. IS3C grew by 149 employees and Orbitech added 348. Moser Baer was the exception, having added 900 employees.

So belt tightening and a marginal increase in the number of people but more business, meant greater productivity. "Our over 100% growth in revenues is primarily because of the change in billing process. There has been more work, more employees and more billing—but this does not mean more customers or a greater geographical spread, " says S Udaya Kumar, vice chairman operations-Axes Tech.

iS3C Consultancy Services President and CEO Udai Kumar attributes the company’s growth in a challenging year to three factors—"Focusing on global 1000 accounts helped us build relationships with 26 Fortune 1000 clients. A focus on the high-demand EAI area helped us deliver high-value-added projects. Our investments in the European and Japanese markets yielded results and showed a three-fold and four-fold growth, respectively."

Ashish Sinha, head, business development at OrbiTech Solutions explains that the company’s revenue growth is due to the COSL-GSU merger. "The GSU revenues got added during the last fiscal year. The figure of Rs 128.6 crores (for 2000-01) was for COSL alone," he says.

OrbiTech, which grew 157% last fiscal is now part of Polaris Software. Polaris incidentally, showed just 7% growth last year but total revenues were Rs 284 crore as against Orbitech’s 330 crore.

Having just started since last November (2001), OrbiTech has notched six non-Citi customers in the last six months. While one of Orbitech’s greatest strengths is the importance and expanse of the vertical it caters to, RMSI’s success can be attributed to the fact that it is a recognized player in the niche Geographic Information Systems (GIS) segment.

"Our GIS division was able to capitalize on this specialization during the last year. Our software services divisions also focused on a few verticals, i.e. insurance, media, and engineering—a key factor responsible for our good results" says RMSI CEO Ajay Lavakare. Also, a relatively smaller client base, "but with deeper relationships" as Lavakare says, helped too. However, he cautions that just sustaining last year’s revenues from the US seems difficult in the year to come as the GIS industry is expected to be negatively impacted in 2002-03, particularly in North America. "As a delayed impact of the fall-out of September 11, 2001, the US government budgets for April ’02-March ’03, which may have been spent on GIS projects will be diverted to ‘Homeland security’ projects," says Lavakare adding that US government agencies now prefer to have the work done in the US, by US companies. The big success story among these companies is that of Moser Baer. Launched in 1983, this hardware manufacturing company focussing on magnetic recording media and optical recordable media, jumped over 30 ranks in the past two years to enter the DQ Top 20 club for financial 2001-02. Not only sales, profits were up 60% to Rs 221 crore.

During the year the optical media market was growing at more than 30% per annum. Moser Baer added capacity to 760 mn to become one of the largest players in the global market with a current market share of 11%. Developing the proprietary process PC12D XT helped the company slash manufacturing costs by 10-15% as well as complete the capacity expansion in record time and below project cost. Moser Baer MD Deepak Puri plans to match the rapid growth in the optical media market by raising the company’s capacity to 1 billion per annum by March 2003. ‘‘We are also looking at the fast growing DVD segment (recordable, rewriteable and prerecorded ) which is expected to boost both the top line and bottom line.’’ he says.

Given that the clouds of recession have cleared and things are looking better for most IT companies, let’s hope there are many more whose growth figures cross that magical 100% mark.

MANJIRI KALGHATGI in New Delhi