Even as information technology (IT) firms were experiencing some respite after the banking, financial services and insurance (BFSI) vertical recovered post the 2008 financial meltdown, Sonata Software Ltd (SSL) continued to grapple with crisis in the travel, transportation and logistics (TTL) vertical and a floundering Europe economy. That was because of the way its business was modelled. But B Ramaswamy, president and managing director of the mid-sized tech firm, told DNA things are looking up with the company eyeing US market more aggressively and easing crude prices improving business prospects in the TTL vertical.Global economy, especially Europe where you earn major part of your revenues, is wobbly again after a brief recovery. The travel, transportation and logistics vertical has also seen many rough patches in the recent past. How are these factors impacting SSL’s growth?As far as Europe is concerned, the issue is in terms of sovereign debt crisis. Though, countries like Germany (which is major market for the SSL) recovered fundamentally very fast. They were never on steroids.Tourism is a consumer-spend and for Europeans travel or holiday is next to only food, even before automobile and education. However, due to general layoffs in the UK, there was a cut in spending. There is also increased competition in the segment. Most companies in the sector have gone through some or the other trouble due to calamities.  First, they were hit by ash problem two times. Then, there was the Egypt unrest followed by Japan earthquake. All these hit their balance sheets. Our customers are going through rough times.What do you gauge from the customer and market commentary?The International Air Transport Association (IATA) has come out with a forecast of increased combined airline losses this year compared to last year. It is based on runaway fuel prices and capacity spurt. We believe it (forecast) will be eased because it was based on oil prices going up to $120 per barrel. Today, it looks like crude will stay at $93 per barrel. That’s one factor, which is comforting. But airlines are still very cautious in their IT spending. Unless, it has to be done for keeping the business running or making sure business is done effectively they (airlines) are not looking at big bang IT splurge. Not that there is a complete freeze in spending but they are much more careful than they were last year.We are seeing management and business restructuring happening across industry. Is SSL looking at a revamp of any sort?Companies that are restructuring are doing it for a reason. I don’t think we have any issue. We seem to be on a path where there is a kind of continuity in what we are doing. My theory is you restructure when you are showing desperation. Today, what is bugging the top tier I companies (Infosys, TCS and Wipro) is Cognizant. Cognizant is a scary word in the boardrooms of these companies.Escalating costs due to higher visa fee and wage inflation is cringing margins of tech firms. How much of a concern is this for you?According to me visa is a side issue. Yes, it imposes constraint in terms of how you operate. Also, the so-called investigations or facing up to immigration regulators are not good for any company. Having said that, is it having a material impact? Even analysts will tell you that it is not going to result in major shrinkage of margin. Visa is class C item of our cost. At the most, it imposes certain kind of rigidity or inflexibility in your business model.Yes, costs have gone up 25% across the industry even as the billing rates are not going anywhere. But if you are offering different kind service you are getting better rates. How are you addressing your cost concerns?Levers like utilisation and productivity have been beaten to death by the industry. I don’t know whether there is any more left to be done on that count. What I think is the way forward will be product mix. You need to look at where your margin is. Customer is willing to pay if he sees value in your offering. Second, I think is the pricing model, which needs to be altered. We need to manipulate levers on the revenue side. On the cost side, we are more or less done.Unlike most IT firms, you earn large part of your revenues from Europe, are you increasing your US exposure to geographically derisk your business?For Sonata, we see US is more of an opportunity for 2-3 reasons. One, it is a large market and our share in the market is lower than industry. US was only 45-48% (of our revenue), it has now moved to 50-52%. But it is still lower than industry average, which is 60%.  Some people have it as high as 80%.

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