Melstar accelerates as niche software services company | Richard D’Souza | CEO, Melstar Information Technologies | Interviews |


Melstar accelerates as niche software services company

Interviewed on Feb 28, 2012 by Yogesh Gupta
Richard D’Souza
Richard D’Souza, CEO, Melstar Information Technologies Staying niche has always been the name of the game. Once the niche factor becomes mainstream, it will be difficult for a mid-size company like ours to compete with the big boys.

Interview Questions

Full Interview with Richard D’Souza

CW : What technologies or businesses are the major contributors to Melstar Information Technologies today?

D’Souza: Melstar Information Services is a Yash Birla Group company offering software applications development and maintenance services. Starting 25 years back as an IT hardware company, we are now a pure software services company. Today, our main revenue lines are professional services consulting and software development. Professional services consulting is staff augmentation in various technology areas wherein people on our payroll work on project sites of Indian and international clients. Today, we have 35 to 40 active customers and more than 450 people at customer sites.

BFSI has been the biggest vertical for us. Applications in commercial banking and financial services such as insurance and broking applications are key areas. We are building value-added applications and services around products available in the market. These would be growth areas for the next three years. We also plan to ‘productize’ applications that we have developed.

Melstar has begun to build ‘proof of concept’ in the mobile phones applications space. The mobile phone will become an application device for enterprises and we need to be there as a niche market service provider.

On the software development front, we develop end-to-end software projects. We are in the process of building specialized teams to address the increased demand for Enterprise Content Management (ECM) services and we would soon sign alliances with two leading software vendors.

CW : It’s been a decade since the shift from hardware onto software services. Has it been beneficial for the company?

D’Souza: In 1990s, we were a hardware-focused value-added company for a large technology company. In 2000, Melstar decided to move away from hardware because its then ‘stock and sale model’ had very high risks. And software was a booming area. There were investments to be made in software too, but the management took up the challenge. Top lines have come down, but profitability has increased.

CW : Would hardware integration be a focus area as enterprises prefer a solution provider who sells hardware, software, and services?

D’Souza: As Melstar treads on the next growth journey, we are again becoming a competent enterprise systems integrator. The focus is mainly on software integrations and services for enterprises. But within the Yash Birla group as a SI, we expect to do full-scale projects that would include recommending hardware too. Analytics and BI will have tremendous opportunities and we would align with the best solutions in the market to provide implementation services.

CW : The focus areas by Melstar including professional services, mobility, analytics, EAM have a ‘Services’ layer woven around it. Why?

D’Souza: Services layer is a niche area for a corporation and is the one thing that encourages a customer to make a big investment with a solution provider. We believe we can make money, and importantly, better profitability with services. Staying niche always has been the name of the game in the technology world for players like us. Once the niche factor becomes mainstream, it will be highly difficult for mid-size company like ours to compete with the big boys.

Melstar is setting up business practices in BFSI, ERP, Legal Process Outsourcing, and ECM. Software services are a clear path that will catalyze our growth. An enterprise systems integrator today has to excel in specialized technologies. We are progressing in that direction carefully and rapidly.

CW : What are the next big opportunities in Indian market?

D’Souza: I believe the Indian market is highly under-automated in terms of computerization and technology. Right through from corporations, government, municipal bodies, right down to the kiraana shop down the street. Not to mention the ample opportunities in personal computing space. There are enough applications and work in tech space for entrepreneurs for at least next 15 to 20 years.

On software front, we are into .Net and Java. But we built teams to developed applications in other technologies including mainframe applications. Whenever technologies have shown the need to be adapted, we have given our best as an adaptive organization. We would continue to be a multi-technology company.

CW : How will Melstar Information Technologies ramp operations over the course of next couple of years?

D’Souza: We expect to grow exponentially. After the Yash Birla Group took over, we have been able to stem the run of three consecutive years of losses from 2007. We re-entered profitability from 2010-11. Within the Group, Melstar is developing an ERP for the Group’s largest manufacturing company in next few quarters. The rollout will give Melstar a significant software product offering to offer to the manufacturing businesses of the Group as well as to the market enabling it to launch other IT initiatives and position itself as in-house consultant, developer, and systems integrator for implementing Yash Birla Group’s IT requirements. However, the bulk of our business will emerge from the larger Indian and international marketplace.

With offices across India, we cater to large enterprises as well as mid-market. We plan to set up offshore development centers as large number of Indian companies outsource IT-related activities. Around 90 percent of our revenues come from professional services consulting with remaining from software development. While the professional services will grow in absolute terms, the new growth areas could change to ratio to 50:50 in the next few years.

CW : Cloud and managed services cannot be ignored by an enterprise solution provider today. Comment.

D’Souza: Cloud is inevitable but our clients are still in the ‘wait and watch’ mode due to security and other issues. Speaking on managed services and RIM, we are not actively looking at it though its potential in today’s market is always at back of the mind. We, as a company, are always analyzing and adopting technologies to whatever opportunities come our way.

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