Nasdaq-listed Sify Technologies Ltd has been going through a transformation during the past four years. It has moved from a mere service provider to an integrated ICT solutions and services player. With the new focus, the company is seeing a change in the business mix, with IT Services business growing faster than its stronghold telecom business. Kamal Nath, Chief Executive Officer, Sify Technologies Ltd, in an interaction with Gireesh Babu, explains how the transformation has progressed so far and the way forward. Edited excerpts:
How has transformation at Sify progressed in recent years?
We started our transformation journey in 2013 and our objective was to transform Sify from being a mere service provider to an integrated ICT solutions and services player in India. In the process we have consolidated our business lines, incubated new business lines, augmented our product and services portfolio and our results are a reflection of that. For the past 18 quarters, we have seen consistent growth in revenue, bottom line as well as order book, which is a result of the transformation that took place within the company.
What was the impact of transformation on each of your businesses?
Our first objective was to change our positioning in the market space. For example, earlier we were only known as an internet service provider in the network space, but today we are more known as a managed network services integrator. In the new avatar, we are a blend of being a service provider, managed service provider and also an integrator, so the customer need not deal with three different players.
In the data centre space, we have six data centres across the country and we are building two more -- one in Chennai and another in Hyderabad. Earlier we were mostly a data centre hosting provider, but we are now more of a data centre transformation partner for our clients. So, what the IBMs, HPs and Wipros of the world used to do earlier by partnering with hosting providers, we coming from a hosting background, scaled up our managed services and IT services capabilities to replace them and enable the customers to move to a cloud model and manage the entire data centre operations for them.
In the cloud space, today we are more of a transformation partner, helping customers move their workload from the traditional on-premise model to cloud. In the Application space, we have our own IPs. The more cloud adoption goes up, our transformation journey will mature.
How has your business mix changed during this period?
Four years back, the ratio of telecom to non-telecom revenue was 80:20 and now it has changed to over 60 telecom and balance 40 per cent is non-telecom. In the order book pattern, the telecom business is 40 per cent, and the non-telecom, which is the IT Services business, is 60 per cent. Two years back it was 70 per cent telecom and 30 per cent non-telecom. This trend is continuing for the past four to six quarters. The reason it is not getting reflected now is because the order book to revenue conversion takes some time. In another 18 months, I am sure that we will be a 50 per cent telecom and 50 per cent non-telecom services business on revenue side. And non-telecom services for us will be predominantly data centre services plus cloud services, effectively data centre centric services of various levels.
What are your plans in terms of market expansion? How important is India in your business?
We have two challenges -- how to become a relevant ICT service provider for our existing telecom customer base and how to enter into new accounts through our integrated IT plus telecom network. We already have more than 3,000 enterprise customer with Sify, before we started the transformation journey. As we have progressed to the transformation journey, we have increased the customer base by another 1,000 customers.
Our primary focus on the infrastructure side is definitely India. Going forward you will see us more on the global side, more than what we are now. We are taking mini steps around that objective. But 97 per cent of our revenue comes from India as of now, because our investments are very high in this country.
As part of transformation, do you look at inorganic growth?
We will not be looking at acquiring any infrastructure company. But any services company of the right size, which can help us to augment our services portfolio, significantly, we will not be shy around that objective. We did some evaluations in the past, but most of these companies are not that relevant in the age which is coming, because they are still traditional providers.
What we are looking at is more of those incremental skill sets, rather than the size of the company or how much revenue it will add to you. Going forward we will be looking at artificial intelligence, big data analytics companies for inorganic growth.
With the transformation, what kind of growth do you expect in near future?
We have been growing almost 22 per cent yoy in a very difficult market over the last four years. But our growth plan for this year is far more ambitious than what we did earlier. Simply because we are far more prepared now for higher growth. The market has recognised us today as new Sify. We have grown much higher on the order book and not proportionately in revenue, since it takes time for the conversion.
