The Hindu Business Line : Making a point, from the backwaters

VENTURE capitalists are demanding. And often blunt. More so in these days. But even then, Nandakumar was aghast when the VC in front of him stipulated an outlandish condition: he will get the funds provided he moves his company out of Kerala!

Nandakumar still can't get over the fact that the VC asked him to shift out of Kerala from where he silently built a small but rapidly growing software product company, SunTec Business Solutions. "I have often been asked how I could have built a company from Thiruvananthapuram. But none has ever been as brusque as this VC,'' he says.

The VC must've been afraid of the reputation of Kerala as a State whose economy is in a shambles; as a State which is yet to prove that it too can be a software destination a la its neighbours and as a place where belligerent trade unions hold people to ransom. But given these conditions of the State from where he built his company, Nandakumar's venture must be viewed a derring-do and his entrepreneurial talents very good. And at least one VC has believed so.

In the year 2000, international venture capital firm Schroders invested $6 million in the company, marking the first major instance of such funding in the State.

What does SunTec do? It is focussed on developing billing solutions for telecom companies and relationship management infrastructure for services such as financial services, utilities and e-commerce. So far it has developed four software products to cater to these areas. Revenues in 2001 stood at $6.3 million, growing at about 120 per cent over the previous year, with 300 employees. All this from a base at Technopark, Thiruvananthapuram, which is still struggling to find a place in India's technology map.

"We have faced a huge perception issue as people feel that Thiruvananthapuram is not an IT place where you could do any work. So when we pitch for clients abroad, I will say we are very close to Bangalore,'' Nandakumar, who is the President and Chief Executive Officer of SunTec, says. He must be quite used to that perception issue now. After all, he has been fighting against it for the past 12 years.

It was in 1990 that Nandakumar, a post-graduate in Physics and then working with Keltron, decided to found his own company. "The idea of Technopark was being mooted in 1989. I took a five-year leave from my job and started my company.''

The first project that he got was to develop a billing system for the Department of Telecommunications (DoT). "I had actually sub-contracted the work from another company which bagged the DoT contract,'' Nandakumar reminisces of SunTec's early days. The project later got extended to other States.

That software project later evolved into a software product, <147,1,0>which was handed over to the Telecom Engineering Centre of the DoT. "Even today, we maintain this product. Out of 330 secondary switching areas, it is used in 230, covering 80 per cent of the population in the country'' Nandakumar says.

SunTec's international foray came about in 1994. A telecom operator in Malaysia showed interest in a billion system offered by Nandakumar, but not without a rider: it had to be developed in 30 days. "I still remember the day when I completed the system. It was the last day and when I was about to give the command for printing a bill, the printer conked out! As luck would have it, it worked again,'' he says.

Singapore-based Unisys came forward in 1995, saying that it was evaluating four projects worldwide and would like to start with SunTec. But things were not easy. Both the firms made joint bids for about 20 projects during 1995-98, but won nil. On the positive side, all these efforts to get projects gave the company a lot of insight and inputs. SunTec bagged its first major contract from Logica of Holland and went to on to add another 5-6 clients. During 1999, when the technology sector was on a roll, Nandakumar was approached by a multinational VC for a total buyout of SunTec. The offer was $35 million, which, had he accepted, would have made him one of the richest individuals in Kerala. "But I did not want to exit completely from the company which I started from scratch.'' The Schroders investment happened afterwards.

SunTec currently has operations in the US, the UK, Germany and Singapore. From telecom solutions, it has also branched out into the financial sector and other areas. Its client list includes firms such as Motorola, Belgacom International, KPN Telecom, Elisanet and Finnish Telecom.

Has he really faced any issues because he is based in Kerala? "Nothing much. But employee turnover is a very critical issue, especially for a product company like us. Software professionals would not like to be in a place like Thiruvananthapuram when they can go abroad or to bigger cities such as Bangalore. So we have intentionally kept a very low profile lest our people be poached by others. Retaining people is like a guerrilla warfare for us,'' Nandakumar says.

Also, being in Kerala means a lot more difficulty in getting experienced people in levels of project managers etc. So the company provides sustained training to the recruits and gives technologically-challenging jobs. "As much as 90 per cent of our people are Keralites who prefer to be with their families rather than venturing out,'' Nandakumar says.

Future plans of SunTec are to do aggressive marketing in the Asia-Pacific region and to tap countries in Africa. In order to raise money for this, Nandakumar is planning to go for a second round of VC funding, worth $5-10 million. Hopefully, he will soon find a VC who likes Kerala.

vipin@thehindu.co.in

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