Clip from IBD article on 1/9/97 with parts deleted:
Satish Sanan, chief executive of Information Management Resources Inc.,
is not bashful in evaluating the proficency of his software outsourcing
firm.
''We generally complete projects in less than half the elapsed time and
at half the internal cost,'' Sanan proclaimed.
''Then you should be a billion dollar company by now,'' the reporter
volleyed.
''We will be,'' Sanan parried.
A billion dollars is a long way from 1996 revenues that should come in
around $30 million. But it's somewhat closer to the $70 million Sanan
expects to take in this year. In addition to $45 million in projects
now under way, Sanan claims $100 million of opportunities that could be
closed within three months. ''Our challenge is how much business we want
to take,'' he said.
IMR's programmers help firms move applications from mainframes to
client-server computer systems. IMR also helps customer firms maintain
existing software programs.
...
Software maintenance isn't glamorous work. But there's plenty of it.
Sanan estimates that over the life of a software application, maintenance
accounts for 60% of all costs. Most recently, IMR has benefited from its
rapidly expanding Year 2000 conversion business.
About 70% of IMR's work is done in Bangalore, India. Lower labor and
real estate costs, along with tax breaks, give IMR's software factories
an immense cost advantage. ''My fully loaded labor cost in India is
less than $10 an hour. In the U.S., it runs to just over $30 an hour,
'' said Sanan, who was born in India and educated in England.
...
Using satellite links, programmers in India can access mainframes based
in the U.S. So IMR programmers can work on these machines at night,
when they would otherwise be idle. This can save customers the cost of
beefing up systems.
...
Just two years ago, Year 2000 work represented less than 10% of IMR
revenues. But this year, and probably for the next three, such work
could account for half of all revenues, Sanan reckons.
Once IMR signs on for a Year 2000 project, it learns enough about a
customer's computer systems to bid on other work. ''Most of these
(Year 2000 jobs) are getting converted into long-term maintenance,
'' Sanan said.
For the nine months ended Sept. 30, IMR sales totaled $19.4 million,
up more than 18% from the year before. Operating income rose by
roughly 42%. Analyst David Grossman of Montgomery Securities (which
was an underwriter of IMR's November IPO), expects IMR to earn 19 cents
(excluding a one-time charge for converting from an a S corporaton to
a C corporation) this year. For 1997, he looks for 49 cents. |
