Patni Computer looks to cut operating costs by Rs 118 cr

“When there is very less visibility on your topline you have to focus on the visibility you (have) on the bottomline by reducing costs.” — Mr Jeya Kumar, CEO

Patni Computer Systems intends to bring down its operating costs by up to $25 million (Rs 118 crore) this year through a slew of austerity measures. “Everybody is taking a hard look as to how every dollar is being spent. When there is very less visibility on your topline you have to focus on the visibility you (have) on the bottomline by reducing costs,” Mr Jeya Kumar, Chief Executive Officer, told Business Line.

Mr Kumar came on board the country’s sixth largest software vendor last December after a global search that lasted two years. Prior to joining Patni, he was CEO of MphasiS and before that headed the $5.5-billion services business of Sun Microsystems.

Staff utilisation
As part of its endeavour to cut costs, Patni is trying to increase employee utilisation by reducing bench strength. The number of employees on the company’s bench is down by half, from 1,600 people to 800-odd, said Mr Kumar.

So will the company look at cutting employee salaries? “We have not taken a call on that yet. However, at this point all options are open,” he said.

Infrastructure costs
The Mumbai-based Patni is also evaluating options to combine some of its offices and overseas development centres to reduce infrastructure overheads.

“We are looking at integrating within the cities that we operate in,” said Mr Kumar.

Patni has started consolidating its delivery centres in Mumbai and Noida; its four delivery centres in Noida will be merged into two by September this year. “The company is renting some space in Mumbai, which we would look to consolidate. We also have space in Bangalore and Chennai that could be optimised,” he said.

Globally, Patni has 27 sales offices and 22 delivery centres.

For the year ended December 2008, Patni had reported expenditure of Rs 1,236 crore. However, Patni would not scale down its sales and marketing endeavours, as the company needs to be prepared for the future, he said.

Mr Kumar has set ‘extending coverage’, in terms of both geographies and sub-verticals, as one of the key targets for Patni.

On recovery in the IT industry, he said, “Whenever somebody asks me when they expect a recovery, I tell them by December. But December of which year, I do not know.”

The length and breadth of this recession would completely reshape the offshoring industry in India, he feels.

“The matrix for success will have to change. It will not be based on the number of bodies that you have but on the kind of IP. I expect companies to generate revenues from services that do not exist today,” he said.