KPIT Cummins to raise revenues from engg services

MUMBAI Thu Feb 14, 2008 7:41pm IST

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MUMBAI (Reuters) - Software and engineering services firm KPIT Cummins Infosystems Ltd is looking to make high-yielding engineering services its dominant revenue earner in three years, a top official said on Thursday.

"We are focussing on boosting revenue from engineering services,especially in our niche segment of embedded electronic software," President and Executive Director Girish Wardadkar told Reuters in an interview on the sidelines of a conference.

It is targeting raising revenues from the segment to 45 percent in three years from 25 percent now, and reduce IT services contribution to 40 percent from 55 percent, he said. The rest would come from back office services.

The company is looking to broaden its automotive segment to include aerospace and marine transportation, he said.

"Focus on the engineering services is essential and our solution for continued growth for the next two decades."

"Opportunities in the engineering space worldwide are reducing but in our niche area we see prices remaining secure," he said.

Revenues from parent Cummins Inc is also seen going down to 25 percent from just about 40 percent in the next five years, he said.

"Our engagement with them is increasing but the share of non-Cummins revenue is increasing. This will be even more so with our renewed focus on engineering services."

The company also sees higher price realisations in its niche area of operations.

"Once the cost arbirtrage advantage has worn off, it will be about non-availability of resources and capacity availabilities," Wardadkar said refering to the demand drivers.

Last quarter the company obtained 12-15 percent higher rates for renewal of master service agreements and 3-5 percent higher prices for new contracts.

The company is planning to add 2,400-2,600 people in 2008/09, to its existing base of 4,152 employees, he said.

Engineering services account for roughly 11 percent of India's total outsourcing export revenues and is estimated to reach $4.5-4.6 billion by the end of the current financial year, Nasscom estimated.

India's total software and services exports are expected to cross $40 billion in 2007/08, according to the Nasscom review.

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