Birlasoft aims to be $1 billion-plus company in next 2-3 years: CFO

Kamini Shah, CFO of Birlasoft aims to make the IT services firm a billion-dollar company in the next two to three years. The company’s focus on growth and profitability; investment for expanding its geographical footprint in the next one to two years; and employee-centricity are the foundational blocks to achieve the goal.

“In the next two to three years the aspiration is to become a billion-dollar plus company,” said Shah. The Q3 results of Birlasoft, which is a part of the $2.9 billion diversified CK Birla Group, are expected soon.

Expansion plan in next one to two years

Shah indicated that they are planning significant investment in the next two years to expand in geographies like the UK, Europe and APAC. In line with this strategy the company, apart from the appointment of other senior leadership, also appointed Manjunath Kygonahally as the CEO for the Rest of the World Region in January 2024.

We are planning to make significant investments in expanding the sales force and footprint in the UK, Europe, and APAC in the next one to two years. We will start expansion into the UK, then expand footprint in Europe and look at specific countries in APAC.Kamini Shah, CFO, Birlasoft

Till Q2 FY24 the revenue from Americas has been maximum at 84 per cent; Europe brings 9.6 per cent; and the Rest of the world brings in 6.3 per cent. Shah shared that the company is focusing on the Americas market, accounting for almost 85 per cent of its business, and its strategy is to expand its footprint globally.

Impact of macroeconomic uncertainty and global inflation

According to Shah, discretionary spending will be under watch. Clients will still be conscious about where they spend and invest for the next couple of quarters. “The US Fed has indicated that there will be rate cuts as far as the current year is concerned. The worst is behind us, but we have to wait and watch and see how things move the next couple of quarters,” she said.

“There has not been a significant impact on demand. But I think things are taking time -- business cycle, from a decision standpoint,” she said. “We are actively working with our customers to shave deals and looking at opportunities in terms of expanding our footprint,” she added.

The ongoing concerns around inflation continue to sour businesses in the US. The Federal Reserve policy rate currently stands in the 5.25 per cent to 5.50 per cent range after a 525 basis point hike since March 2022. Rate cuts are expected in March. Given that Birlasoft’s 85 per cent revenue comes from Americas, Shah believes that the clients are taking some time in making decisions on large programs.

Further Shah said that there is uncertainty in terms of recession. “Tier two companies in the US are probably a lot more shielded from the macroeconomy than the larger players. However, uncertainty will continue in 2024 and extend till 2025. We are hoping to get clarity after the elections are over, when the economy will settle,” Shah said.

Focus areas

The company is focused on four verticals holding individual P&L (energy, banking, life sciences, and manufacturing) and has consolidated its customer base to prioritize partnerships.

Ergo from a strategy perspective we’ve shifted from a service line-driven organisation to the verticals owning the P&L. This encourages sales leaders to focus on revenue, that is growth and profitability. This is the reason for our margin profile improving quarter on quarter.Kamini Shah, CFO, Birlasoft

What keeps the CFO awake at night?

Birlasoft has implemented an enterprise risk management framework this year to mitigate both operational and strategic risk, told Shah.

Shah also shared that “geopolitical risk”, “business environment risk”, and “internal controls and compliance” keep her awake at night as a CFO.

The uncertainty around the impact of geopolitical risk on the macroeconomy keeps Shah worried as the consequent impact on the demand is unknown. On the other hand business risks, for example, a customer filing for bankruptcy, where one has no control are hard to foresee.

Thirdly, internal controls and compliance, as Shah said, “While we live in a highly regulated environment it is important to be extremely careful to never get caught on the wrong side of the law, as a huge reputational risk is involved.”