Technology13.07.2005
SA’s Tata connection
Monolithic Indian business conglomerate Tata – which comprises 91 companies with interests in steel, cars, financial services oil and tea – is a dominant player in India’s IT industry. The Economist reports that Tata’s IT arm, Tata Consultancy Services, is one of India’s three biggest IT companies (together with Infosys and Wipro), and that these are “among the top ten globally in terms of stock market capitalisation, gross profits and employees.”
Closer to home, the Tata brand is starting to become ubiquitous, through low-cost vehicles which are being sold here, and Tata’s telecommunications subsidiary Videsh Sanchar Nigam Limited (VSNL) being awarded a 26% equity stake in the second national telephone operator (SNO). A lesser-known fact is that Tata also has a presence in South Africa’s IT market: in 2000, Tata Africa Holdings started a joint venture with Jayendra Naidoo’s J&J Group called Consilience Technologies, which focused on IT services and Solutions. According to the Tata Group’s 2005 review, J&J then bought a 30% stake in small IT firm Faritec in April 2003. Speaking on the Moneyweb Power Hour, Faritec CEO Simon Tomlinson said the Concilience engine has been retained and “still trades as a business”, but that Faritec has a formal relationship with Tata Infotech and that Faritec “deals directly with India with that relationship”. Tomlinson said Tata Infotech is a “$900m business on a worldwide basis”. “It does a lot of outsourcing of development work for companies all around the world. It’s one of the leaders in the .Net space from Microsoft and within the WebSphere space. We’re leveraging off that skills base, and [off] the work they’ve done in that space to take new solutions to our customers.” Faritec’s fortunes have not travelled a clear path, venturing between losses and profitability along the way. Known in IT circles as the number on IBM reseller in South Africa, the company has worked towards developing other revenue streams in software and services which are annuity-based and thus more reliable. The restructuring seems to be paying off: in its trading statement for the year to end-June 2005, Faritec expects to reverse last year’s R11,6-m loss to earnings per share of between 4,6 and 5,2c. Software accounts for only 10% of Faritec’s revenues, although this segment of the business was up 145% in the past year. Said Tomlinson: “The software [segment] is broken into three main areas – the security business where we focus together with Symantec, some integration products, mainly focusing on the IBM WebSphere suite, and then some links into Microsoft.” The latter is where the partnership with Tata Infotech comes in. Tomlinson said the partnership with Faritec is “much on the basis of Faritec doing all of the marketing and drive into the market” for Tata Infotech’s products. Besides this, he said Tata is keen on developing skills in South Africa: “They’re looking to do is to participate, together with Faritec, in building skills that can offer their services, their products and a lot of their skills into the South Africa market. And really what they’re looking at is building up the capability very quickly through leveraging off the skills that they have internationally, but ending up with a team of skills in the country that can sell their products and deliver the services for them.” Tata also views the partnership as a way to develop its African footprint, said Tomlinson: “Their model is to have a small kernel of skills inside the country that they operate in, and then outsource a lot of the work overseas. A number of our people have been across there – and if you can imagine a warehouse the size of a couple of rugby fields, where people are just shipped in on eight-hour shifts, just writing code for companies on a worldwide basis. All of that skill… is available to Faritec in terms of our ability to not only leverage the skills that they have, but also the outsource development opportunity and then also the products that they’re developing.” Asked whether there was any room for another player in the South African IT market, Tomlinson said companies are looking for applications which can integrate systems that are already in place: “If one looks at some of the banks that are now going with SAP, and are looking at their portals in the front end, how do they integrate those systems in the back end to the front end, and how do they do that very quickly?” He said Faritec/Tata Infotech fill this gap, where there are 150 people working on six- to 12-month projects writing code “as quickly as possible so that the customer can leverage that value of that system”.Tomlinson said Faritec is looking at growing into the African market together with Tata: “The Tata Africa business was a fairly small business in South Africa. They’re building up a lot of general skills across all of their product sets and [are] starting to build significant relationships with various companies to do that.”
Source: http://www.moneyweb.co.za
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