New Delhi, April 14: Hughes Software Systems plans to focus on telecom and business process outsourcing (BPO) to spruce up its bottomline which suffered last fiscal because of a 27 per cent slump in net profits.
The company is targeting a net profit growth of 40-45 per cent this calendar year because of the change in its business strategies.
Hughes Software hopes to leverage its new growth driver — a part of the telecom business of Lucent that it acquired earlier this year — to maximise its profits.
Announcing the results for 2002-03 and the fourth quarter, Arun Kumar, president and managing director of Hughes Software Systems, said: “Telecom is a challenging sector with service providers now planning to invest more on the infrastructure set up. We are looking at scaling our operations based on large account acquisitions and enhancing the size of our existing relationships. The Lucent contract has given us scale, recognition and the potential for future business with Lucent and the Lucent customer base.”
The company plans to use three components of the Lucent deal to increase its profits — the existing contracts of Lucent with other telecom service providers, the preferred partner status that Lucent enjoyed with other telecom operators and with Hughes Network system and more telecom products to be developed over the next few quarters.
Last year, Hughes Software's total income declined by 8 per cent at Rs 2,293 million in 2003 as against Rs 2,481 million last year and the sales went down by 6 per cent at Rs 2,204 million during 2003 as against Rs 2,349 million in 2002 with earning per share also down by 27 per cent on a year-on-year basis.
Hughes Software’s net profit stood at Rs 379 million during the financial year 2003 as against Rs 522 million during 2002.
However, HSS registered a 21 per cent sequential growth at Rs 138 million in the fourth quarter of financial year 2003 on a quarter-on-quarter basis. The total income registered a 13 per cent growth at Rs 665 million while sales registered a 12 per cent growth at Rs 138 million during the fourth quarter.
Kumar said, “We have shown a consistent quarter-on-quarter growth in the last three quarters and continue to work towards predictability and scalability. The overall telecom macro picture still does not show clarity although the worst seems to be behind us.”
The company expects to increase its total revenues from the BPO operations and plans to slowly increase its capacity from the current 200 employees. “This year about 7-8 per cent of our total revenues has come from the BPO operations and we expect this to go up in the next financial year,” said Aadesh Goyal, executive vice-president and general manager of Hughes Software’s BPO services.
During the quarter, the company added seven new customers for products and services. “Professional services, continued to gain traction during the quarter and grew sequentially by 26 per cent. Higher volumes from existing relationships and revival of the old relationships contributed to the growth during the last quarter,” Kumar said.