Persistent Systems sets in motion changes to bring bak firm in higher growth bracket

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Published: May 2, 2019 12:37:17 AM

Chairman and managing director Anand Deshpande said weak growth was more due to internal structure than external market conditions and growth was coming back in the market, and there were enough opportunities in the market.

Persistent would be recruiting 1,500 people this year and around 80% of this would be offshore, Sapre said.

After a weak Q4 FY19 and a low FY19 growth, Persistent Systems has set in motion changes at the firm to bring back the firm into the higher growth bracket.

Chairman and managing director Anand Deshpande said weak growth was more due to internal structure than external market conditions and growth was coming back in the market, and there were enough opportunities in the market.

Top leadership changes have been made at Persistent to drive growth. The firm has appointed Christopher O’Connor as chief executive and additional director. O’Connor comes to Persistent from IBM and will be the global face of the company, Deshpande said. Sandeep Kalra has joined as president for technology services from Harman.
The company was also looking at acquisitions to fill gaps in its offering and would be using cash in the company of $215 million to make those acquisitions, Deshpande said. “We are looking at new domains and diversification in Europe. Acquisitions would be more growth-oriented and not additive,” Desphande said. “The share of business from Europe was around 8.8% and the company was looking to grow this.” The firm had been transitioning from a mainly outsourced product development company to a more digital and IP-led company and these had its challenges, he said.

“The company was also dealing with talent crunch to have the right people at the right time and right space and a higher attrition rate of 16.5%. The company was adding to offshore headcount, internal re-skilling, lateral hires and staffing based on skill requirements, and fresh hiring was going on to deal with this,” he said.

During the past two quarters of FY19, the percentage of offshore business went up than the onsite business and this trend would increase as it was becoming difficult to hire talent locally as rates were going up and there were visa issues to deal with, Sunil Sapre, executive director & chief financial officer, Persistent, said.

Persistent would be recruiting 1,500 people this year and around 80% of this would be offshore, Sapre said.

During Q4 FY19, there was a drop in revenues from its number one customer, IBM, and overall drop in IP-led revenues. Persistent saw a 2.1% quarter-on-quarter (QoQ) drop in revenues to $118.30 million and the de-growth was 3.7% in rupees. Profit after tax declined 7.9% QoQ.

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