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July 24, 1998


Datamatics sets up German subsidiary

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Datamatics Limited, the Rs 2.5 billion Bombay based information technology major, has opened a 100 per cent German subsidiary, Datamatics GmbH, with a seed capital of $100,000.

This is the second overseas subsidiary for Datamatics after its US subsidiary. The Japanese and the UK subsidiaries are also expected to be up shortly.
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The company is targeting revenues of $4 million from the subsidiary in the first year itself. This is expected to improve exponentially, at a rate greater than 100 per cent per year, said Rahul Kanodia, joint managing director, Datamatics.

Datamatics has also kept its options open of increasing its capital investment in the subsidiary to $1 million, depending on the growth and market potential. Two Germans have already been hired at senior level executive posts and depending on growth of operations, the company expects to ramp up to about 40 employees by March 1999.

"Given the industrial economy of Germany and the large manufacturing sector, our efforts in Germany will be channelled through our strategic business unit dealing with manufacturing processes. The other focus will, of course, be the Euro currency conversion, which offers tremendous business opportunities in Europe,'' Kanodia has been quoted as saying.

Also on Datamatics GmbH's agenda are migration services from legacy hardware platforms and operating systems including ERP implementations and re-engineering/resizing of IBM systems.

Plans, in line with experience and growth in market opportunities for Datamatics GmbH include offering IT-enabled services in a big way in Germany.

Towards this end, the company has set up a centre where employees are trained in German culture, language and business practices.

Another area where the company expects to have a presence in future is in embedded software services.

This year Kanodia has also initiated a 'performance metrics' programme within Datamatics. Explaining the concept, Kanodia said: "Normally companies are evaluated on financial performance, revenue growth, growth percentage, sometimes on profitability. But all this only gives a measure of the financial health of the company. Tracking human resources index, quality index, customer satisfaction index within the company, in addition, would give a more balanced view of the performance of the company.''

"Financial soundness is an important criterion but there are several others that are equally important. Performance metrics will, for instance, enable you to see how you're doing vis-à-vis your corporate strategy. It gives a measure of whether, and by how much, you're off-track,'' he added.

"Another important issue is that of grooming successors; whether you are training junior employees to move into higher posts so that as the company grows, the senior management can take on additional responsibilities... whether employees are contributing to departments other than their own in terms of synergy building, etc.

"Once the internal process stabilises, then we will benchmark against the more aggressive companies in the marketplace. Until then it is a purely internal exercise. If the organisation is divided into six levels from chairman down to the lowest employee, the performance metrics model has been implemented in three levels from the top,'' said Kanodia.

The rest of the organisation is expected to be brought into the model soon.

Given that many of the benefits of such an exercise are intangible, measuring the benefits derived to the organisation becomes very important in terms of the value of conducting such an exercise.

Addressing this, Kanodia said, "we realise this problem and we have developed a detailed list of tangible components that need to be measured to arrive at the value got through the programme. But then, there are some tangible benefits that are very powerful, and very visible - lower attrition rates, higher customer satisfaction, etc''.

Within its technical community, Datamatics has an attrition rate of about 14 per cent while the overall attrition rate is less than 10 per cent. The rest of the IT industry suffers an average attrition rate of 20-30 per cent.

The ultimate target of this programme, according to Kanodia, is to take Datamatics to the top slot. "In five years we should be rated higher than our competitors, in all respects - financial, work culture, work ethics, customer satisfaction, etc - and that with a marked difference.''

- Compiled from the Indian media

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