Polaris Software hopes to double client acquisition rate next fiscal

Vandana Gombar in New Delhi

Confident of riding out the impact of 911 (as the September 11 tragedy is referred to now), the Chennai-based Polaris Software Lab is looking at hiking the client acquisition rate per quarter in 2002. “We have been adding 6-7 clients every quarter. We intend to hike this to 10-12 clients per quarter in 2002. We should be adding 40-45 clients in 2002,” chairman and chief executive officer of the company, Arun Jain, told The Financial Express. The company’s current active client base is 87.

Since 911, there has been a delay in closure of deals. “We expect some deals to be signed in January-February. That would translate into April-June being a good quarter,” Mr Jain said.

Despite the delay, the company is confident of meeting its revenue guidance of Rs 300-320 crore for the year ended March 31, 2002, up 11-19 per cent over last year’s Rs 270 crore. In the first half of the year, the company earned revenues of Rs 144 crore. This would mean that revenues in the second half of the year would have to top those of the first half.

“We are standing by that guidance,” Mr Jain said. The reason: Polaris has developed an advanced sales process matrix which allows it to zero in on sales opportunities with a good degree of precision. The P5 model, as it is called, has shown Polaris 75 addressable opportunities, half of which are emanating from the US, about 27 per cent from Europe and 20 per cent from the Asia-Pacific region.

Polaris gets as much as 70 per cent of its revenue from the specialised vertical of banking, finance and insurance.

Talking about the outsourcing trends in this sector, Mr Jain said large financial institutions are struggling to implement cost-cutting
directives.

“They have no option but to look at India for outsourcing. The CIOs are in fact being directed to look at India,” he informed.

Brushing aside the threat of competition from larger players in its core vertical area of operation, he predicted a multi-vendor outsourcing model evolving. “A large $50-$100 million order will not be given to one company but will be divided between multiple companies,” he said.

He also allayed concerns about client concentration of the firm, with Citibank accounting for 30 per cent of revenues and NEC for 15 per cent.

“We are comfortable with that. There are many global examples of such client concentration and the companies are none the worse for that. EDS, for example, gets 60 per cent of its revenues from General Motors,” he said.

He also ruled out any lay-offs in the firm. “We are over 2,500-strong as of date. We will be short of people in about six months and will in fact be recruiting,” Mr Jain said.

Polaris, like other companies with international listing aspirations, has deferred such plans for the foreseeable future.

“Such a listing is generally part of a brand-building exercise. Even that purpose is no longer served,” he said.