Business Today Net Special

Retry, Covansys

Fortune may have selected Covansys as one of 100 fastest growing companies in the US, but the company's bottomline does not seem to be keeping pace with its toppling. Now, its CMD, Raj Vattikiti, is looking to his homeland, India, and three segments, for help in bouncing back.

By Venkatesha Babu

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Branding and focus are two words which keep repeatedly occurring in midst of sentences when Raj Vattikuti, founder and co-chairman of Covansys (formerly known as Complete Business Solutions Inc.) speaks. Focus would be one thing that the Farmington Hills, Michigan-based Company would definitely be looking for. Fortune (September 2000) might have selected Covansys one of 100 fastest growing US-based companies but the bottomline does not seem to be keeping apace with the toppling. Covansys has been struggling to make the transition to the new internet-based economy. Even though the old CBSI worked on an impressive list of big clients, the new company announced this week (February, 15) that it had written off $40.3 million in pre-tax charges on a turnover of $106 million, in its fourth-quarter including costs associated with restructuring the company. The company had also taken a huge hit in quarter three as it had to write off $ 15 million due from failed dotcoms.

Vattikuti admits that the company is passing through a rough patch. 80 per cent of its revenues were repeat business from its existing customers. This is no wonder, as surprisingly for a company with revenues in excess of $300 million, it hired its first sales and marketing people only in the last quarter. Say Vattikuti: "That shows great customer satisfaction and loyalty; but when you’re not growing, it is a problem. Now we have a specific sales organisation that is hunting new game." "The company decided to restructure in order to increase its customer base as well as improve its bottomline. The old company had a great set of technical and engineering competencies, but they were spread across a whole variety of service offerings and market spaces, to the point where it was not clear what differentiated us from anybody else or what our real claim to fame was," says Vattikuti.

As part of the restructuring exercise the company plans to focus on three verticals.

Helping companies adapt to the web: Web to Enterprise Integration. This is the next big wave of IT integration, the integration of e-commerce with enterprise applications that actually run most businesses. "Customers are starting to realise the real benefits of e-commerce, which are the efficiencies gained through that integration and Covansys will strive to deliver them," says Vattikuti.

Focusing on opportunities in other market areas like providing software solution in healthcare, telecommunications and financial services.

IT Outsourcing

Raj feels that the biggest strength for Covansys is its 1,800 strong pool of software development talent located in India, out of a total employee count of 5,000 worldwide. "This Indian talent enables us to get a major portion of our development requirements to be done offshore helping us to maintain and improve margins." The company also plans to increase its headcount in India. Vattikuti feels that it is not just a new shingle which has been hung outside the company (reflected in the name change) rather the entire company has gone in for a radical restructuring. Covansys listed on Nasdaq is looking towards its Indian operations to give it the cutting edge in the US market.

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