Zenith forays into BPO space; Goes ahead with expansion

Despite the global recession and the massive layoffs, Zenith software, a leading software company and part of the $120 million Zenith Group, having recently forayed into the KPO space is going ahead with its expansion plans. The Bangalore-based company is expanding its office into a new campus that can house that can accommodate 500-600 per shift.

In an interview with Manu Sharma of CIOL Bureau, Sampath Kumar, CEO of Zenith Software talks about the new business foray and its recruitment drive in India. Excerpts.

CIOL: What has been the impact of recession on Zenith Software?
Sampath Kumar: The US recession has not affected us so far. The only problem is that the US companies want to push the dates. No one wants to decide immediately but business has not affected us in any way. But they are keen on outsourcing the work to India. It is a ‘wait n watch’ situation to gauge its impact in 2009.

CIOL: What has been your recent expansion plans?
SK: Since we are foraying into the information technology enabled services (ITES) in a big way, we are expanding our office by moving into a new campus of 25,000 sqft of built-in space located in Koramangala. The building will comprise of four floors and can accommodate 400-500 employees per shift and we can be further expanded to accommodate 1,500-2000 if necessary.

CIOL: What is Recruitment Process Outsourcing (RPO), why has Zenith forayed into this space?
SK: Zenith has signed up with NovusSTS (pioneers in the newly defined recruitment process optimization business) for providing RPO services. RPO is a form of Business Process Outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider.

CIOL: What are the work involved in RPO and its benefits?
SK: RPO involves the outsourcing of all or just part of recruitment functions and process. RPO providers manage the entire recruiting/hiring process from job profiling through the on boarding of the new hire, including staff, technology, method and reporting. A properly managed RPO will improve a company's time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance. The RPO service provider is the source for in-scope recruitment activity.

CIOL: What is the future of RPO industry in India?
SK: Since only about 20-25 companies are into this pace in India, we see a bright future. Our policy is not to target the big players but instead found a partner for the delivery.

CIOL: What is Zenith role in the LPO industry?
SK: Zenith has been in this sector for the last three months and has entered into a joint venture with a law firm based in US. We have started with the training process and have about 10 employees, who are corporate lawyers and LPO professionals involved in document reviews, immigration services and contract drafting.

CIOL: Explain the travel software developed by Zenith?
SK: The company has developed a travel software similar to IBS. It is a total integrated software for the tour operators operating across the country. This is the first product by Zenith and was earlier exhibited in Mumbai in a travel expo called – Travel Eye. The product is likely to hit the market by 2009. In respect to the pricing of the software, we have planned to price it between Rs 5-10 lakh, depending on the module, we will customize it as per your requirements. The product was developed over the last two years and about 10 software engineers were involved in the product.

CIOL: What are the other software developed by Zenith?
SK: Following our success with the travel software, we are also developed a software for a retail company in Australia. Similarly also developed a automobile product for the Norwegian market expected to be rolled out in 2009.
For the insurance sector, we have signed up with a UK-based company for the development and support of large US insurance firms. This is for the life insurance products and we will handle the customisation, maintenance and the enhancement of the product. Similarly, we have also signed up with a Swiss company for non-life insurance. We have completed the prototype of the product using Java and the product will be out by end of 2009.

CIOL: What has been the attrition in your organization?
SK: The attrition in our company is only 8-10 percent much lesser than the industry standards of 25-30 percent in BPO industry. Presently we have a 50:50 mix of developers and ITES (BPO) employees. I feel ITES will outdo IT and already we have employed 35 members in the last one-month and will hire another 25-30 in the next few months.

CIOL: When has Zenith forayed into the Scandinavian market?
SK: Zenith has forayed into the Scandinavian market through a partnership with Norway-based Software Offshoring Consulting (SOC). SOC is part of the Norwegian Data-Invest Group that has been providing progressive and market oriented solutions and services. This partnership will expand Zenith Software Ltd’s (ZSL) footprint in the European market.
ZSL and SOC have been working together on joint product development for the automotive industry. This product will also be maintained by ZSL for all the clients across the globe. This relationship has now matured into partnership wherein ZSL-SOC would jointly market and provide offshore development services. This is an exciting phase in ZSL’s growth plans. With SOC’s strengths we will be able grow in the Nordic.

CIOL: How do you see the future of Zenith Software shaping up?
SK: With our foray into BPO/KPO space and from the present turnover of $6 million, we had anticipated a jump of $10-12 million by 2009. But do the present industry scenario we may now expect only a 50 percent growth from the initial target of 75 percent. The only problem we are facing is that things are not happening and projects are getting delayed. The trend is not only in the US market but also in UK and European markets as well. ”US is creating a ripple affect on other countries.”
By 2012, Zenith expects the company to have 2000 plus employees with major revenues from UK, European countries and a 10 percent decline from the US markets. The company will strongly look at analytics, insurance, claim processing, medical billing and market research in the future. We are in talks with insurance and healthcare industries.

CIOL: Any IPO plans in the pipeline?
SK: We have seen a good growth so far which has been totally debts free. We see inorganic growth growing faster than organic growth. We plan to roll out an Initial Public Offering (IPO) when the company reaches a turnover of about $50 million and with over 3000 employees.

CIOL: What are your plans for expansion into Tier II cities?
SK: The company is also targeting at Tier II cities like Mysore, Mangalore. But we find a number of problems like poor resource stain, poor infrastructure is another major problem. In fact, we initially looked at a SEZ in Salem, but later withdrew the idea.