Mid-sized firm NIIT Technologies is eying revenue growth from software platforms and Intellectual Property (IP) areas. Further, the company is looking at business from outcome-based pricing, instead of the traditional Time and Materials (T&M) based-revenue.
In T&M, a company generates revenue directly in line with headcount addition. “At present, about 22 per cent of our revenues come from our new business model and this will increase in this fiscal,” Arvind Thakur, CEO, NIIT Technologies, told Business Line on the sidelines of the Nasscom Summit. The company, which clocked around $300 million in revenues last fiscal, gets around 78 per cent of its business from non-IP and platform service lines. This is hugely due to increasing commoditisation in traditional software development and companies such as NIIT and TCS are trying to bag deals with this kind of differentiation, according to analysts.
Also, technologies such as cloud computing and social media are changing the way outsourcing clients are engaging with outsourcing vendors.
“Everything from managed services to cloud computing-related services are all moving towards outcomes based-revenues,” added Thakur. The company is undertaking these initiatives due to some stagnation in some of its business areas. Its order books has remained stagnant at around $240-250 million for the past five quarters, according to an Emkay Global Financial Services report.
Net profit
In the third quarter of fiscal 2013, net profit dropped 12.5 per cent to Rs. 56 crore due to currency volatility. However, Thakur is optimistic that the company will grow at 11-14 per cent, which is Nasscom’s estimates for the sector this fiscal.