Finite possibilities

Started from the debris of the dotcom meltdown six years ago, Bangalore-based Infinite Computer has become perhaps the fastest company to log revenues of $100 million in the fast-growing Indian IT industry. But after growing 100 percent every year since inception (and being profitable too), the company is now preparing to face the challenges of a fast-consolidating market head-on. For starters, it has laid out plans to become a $300-million company by 2010-11 and will focus on the telecom market as its main revenue earner.

Encouragingly, Infinite has decided to bite the bullet and move away from a linear growth model (more people and, therefore, more revenues) and instead focus on higher productivity per employee. “The appreciating rupee, war for talent and escalating wage bills are all major obstacles for our growth, especially for mid-tier companies like us,” says Upinder Zutshi, CEO, Infinite Computer. Evidently, the company is preparing to lose some of its low-margin business (and potentially easy revenue) as it makes the transition to a highervalue player.

For starters, the company plans to invest $20 million in expanding its telecom expertise over the next few years and has already begun this process by acquiring Comnet, a US-based telecom software provider, for an undisclosed sum in late September. “This company has just 350 people but revenues of nearly $10 million,”says Zutshi. “We also want to make the transition to being a much higher-value player.”

While Infinite currently focuses on five major industries, it expects to rework its business model to get at least a third of its business from the telecom vertical alone. “We have managed to survive vendor consolidation among the global telecom conglomerates who are themselves in big-ticket mergers,” says Zutshi.

Despite this bravado, he is aware that there is plenty of work ahead if he is to keep Infinite’s growth on track. For starters, the company is beginning to really feel the effects of an appreciating rupee, according to Zutshi. Profits slid by around 10 per cent in the last quarter and the company is being compelled to increase its hedge to insure against future currency fluctuations.

Unlike several peers, Infinite has relied primarily on internal accruals to drive its growth and has remained debt-free for most of its existence. “This will change as we pursue our new growth strategy. We will decide in the next 12-18 months on whether to opt for public or private equity to fuel our growth,” says Zutshi. Private equity giants such as TPG and Blackstone are already circling the mid-tier market and have been linked with several companies including Patni. Aside from raising funds, Infinite will also have to worry about getting swallowed up by the consolidation wave, as large MNCs look to buy a sizeable India delivery presence. While the likes of MphasiS and Kanbay have already sold out to MNC giants, Infinite’s profitable and growing business may prove to be an ideal target for other companies in the months ahead.