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Outsourcing, the mantra for growth at Mastek

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DQW Bureau
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Nanda Kasabe & Rashida Bakait

The Mumbai-based software services company, Mastek has drawn up a six pronged strategy for growth in wake of the slowdown in the IT sector. The chief strategy for the company would be to increase their outsourcing for Fortune 1000 companies besides an expansion into non-English speaking areas.

Chairman and Managing Director of the company Ashank Desai maintained that while Europe would account for a substantial part of business for offshore accounts, the company was making a lot of initiatives to bid for large projects in UK. Europe currently accounts for 50 percent of the company revenues.

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Mastek made a recent entry in Japan besides completing a project for the simulation of a wafer fabrication plant in Germany. "We are making special efforts to tap Netherlands, Switzerland. We may start a subsidiary in Switzerland this year," Desai said. Mastek already has a subsidiary in Belgium.

The CMD mentioned that they were venturing into new technology areas in the area of UTMS and embedded systems. The large order in Japan involved offshore development work in the area of telecom, he said. Currently, the non-English speaking countries account for 4 to 5 percent of the company revenues. However, Desai expected these to grow faster than the English countries.

Mastek has formed a special cell in the company to executive their offshore strategy. The cell will receive proposals, examine them and prepare and evaluate these in the interest of the company. The six point strategy on the company agenda includes increasing their offshore work, building new technologies and products, forming alliances and joint ventures, building domain knowledge and acquisitions.

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Desai cited their recent joint venture with Deloitte Consulting Firm as a step towards their building their offshore strategy. The JV will offer India-based software services in areas such as application development, systems implementation/integration, and information technology outsourcing services. The JV is the first offshore delivery relationship of its kind ever taken by Deloitte Consulting. Although the name of the new company is yet to be finalized, the JV is already operational in Mumbai with around 600 professionals to be inducted into the new company in a span of three years.

During the quarter, Mastek charged off Rs 5.58 crore in respect of its investments in Varstreet. Although Varstreet continues to be in operation, keeping in mind the US slowdown, the company has decided to write off the investment. A new facility will be coming up at Mhape on the land taken by the Maharastra Industrial Development Corporation. The Mastek group announced a total income of Rs 260.87 crore for the period July 2000 to June 2001, an increase of 2.8 percent over Rs 253.73 crore for the corresponding period in the previous year. Desai expects growth to the tune of 10 to 15 per cent this year.

(CNS)

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