NETWORK SOLUTIONS: Strong On Services

By virtue of its undiluted focus in the networking domain, Network Solutions
(Netsol) has emerged as one of the top three pure-play network integrators in
the country. Recording an impressive 43% revenue growth in the fiscal 2003-2004,
the company has emerged a tough competitor to larger system integrators like
Wipro Infotech as well.

This is largely a result of its service-driven business model, which lent it
an edge in many a deals that it bagged last year. Hence, its service
contribution (approx 45%) to the overall revenue figure of Rs 179 crore, stands
way ahead of industry average. In 02-03, the service pie stood at 40%.

Netsol displayed some impressive performance in the IT/ITES space last year,
with some major wins coming from BPO companies. One of its largest project was
valued at Rs 10 crore, wherein the company provided end-to-end networking
solution for Accenture. Transworks, Nirvana, Google, Macromedia were some other
prestigious additions to its IT/ITES client list last year.

The company managed a diversified customer base with significant wins in the
BFSI space as well. But what really stood out for the organization last year was
its relentless thrust on services, wherein it evolved to offer professional
services, consultancy, managed services-something which many network
integrators are currently just talking about. In its managed services, it
handled clients like HP and ICICI, and also increased its headcount from about
750 to over 1,000 last year to handle manpower-intensive projects.

Netsol also became one of the very few companies to have a Network Operations
Center (NOC) and possessing the capabilities of remote network management. This
combined with its matchless expertise in the field of indigenously developed
software tools, offered it a favorable gateway to enter foreign shores as well.
Its software products business, last year, contributed around Rs 8 crore in
revenue, which the company indicates will see sharp growth rates in the coming
years.

From a pure-product revenue perspective, Cisco was the single-largest vendor
for Netsol, contributing 65% to the hardware sale. Realizing the need to address
technologies dependent on the network, it ventured into the space of security
and storage. It worked with Network Appliance and IBM on storage, but the
relationship with the latter did not work out.

While flying high on a growth trajectory, Netsol did not compromise on its
profitability. Its a strategy that also enabled it to invest on creating
footprints in international marketsUS and Europe. If things go well, it could
well enjoy payback of these investments from this year onwards.