Soon after the global dotcom bust in 2000, three childhood friends - Siddharth Sethi, Mitesh Bohra and Avinash Sethi, in their mid-twenties then - decided to set up a software company in their hometown, Indore, Madhya Pradesh. Unlike Bengaluru, Hyderabad or Pune, Indore was not an IT hub, and the three were then working in the US.
InfoBeans Systems (renamed InfoBeans Technologies in 2017) was incorporated with seed capital of $3,000 (about Rs 1.2 lakh) from each co-founder in 2000. "After that we have never invested our own money or others' money, until we raised Rs 37 crore through a public listing on the NSE two years ago. We have been ploughing back to build our company, one block at a time," says Avinash Sethi, CFO of InfoBeans.
It took 10 years for the company to stabilise. "All three of us were actually coding, as late as 2011. We were growing the business in a very organic manner," Avinash Sethi says. In 2002, InfoBeans got its first Fortune 100 client and in 2006, its employee base hit 100. It rose to 500 by 2015, and by 2017, it had offices in Dubai and Germany. Today, InfoBeans employs 650 people on its Indore campus, and another 200 in Pune.
In 2018/19, InfoBeans' turnover (consolidated) was Rs 120.38 crore, a 24 per cent increase over 2017/18. It reported an EBITDA of Rs 25.08 crore and net profit of Rs 17.23 crore during the period. It added 17 new clients, two in the Standards Development Organisations (SDO) space, a niche area in the US; five in ServiceNow, a fast growing enterprise software; and 10 in enterprise services. Siddharth Sethi, CEO, is responsible for software delivery for all geographies and business development in Europe and West-Asia while Mitesh Bohra, President, looks after R&D and business development in the US. Avinash Sethi handles finance, inorganic growth opportunities and human resources.
InfoBeans also focuses on Enterprise Software Engineering services in implementation, product development, digital transformation and automation. "We come across Infosys, TCS, HCL and others as competitors regularly. We have seven Fortune 500 companies as clients. We are an 850-person organisation, and Fortune 500 firms still work with us," says Siddharth Sethi. "Our strategy is to work with select customers where there is tremendous growth potential. We go for larger enterprise accounts. It takes some time to fructify, but once you get in there, it is a blue ocean."
According to Siddharth Sethi, the only disadvantage of being small is scale. "If a company comes and says I want to do a 1,000 person project, we can't do it. We can stretch ourselves only to a limit. Other than that we have no disadvantage," he says.
Avinash Sethi points out that the company has registered a compound annual growth rate (CAGR) of 29 per cent over the last four years. "We have grown from Rs 43 crore to Rs 120 crore (in 2018/19) in four years. Our net profit margin is better than peers, and much better than the industry average".
Almost 92 per cent of the company's 2018/19 revenues came from the US, 5.34 per cent from Germany and the rest from West Asian clients. IQVIA, a US-based compliance software developer for pharmaceutical industry; legal media and publishing firm ALM; HR outsourcing firm CoAdvantage; and Dubai-based UAE Exchange are among its major clients.
"Over 80 per cent of our business comes from the top 10 customers, all are our long-term clients with an average seven-eight years of growing business relationship. We got three Fortune 500 companies - one each from the US, Germany and Dubai - as new customers last year," says Mitesh Bohra.
The promoters, who hold 75 per cent in the listed entity, say they raised funds from the market to push growth. "Our overarching goal is growth that can sustain. We want to double our sales every two years, for many years to come," says Avinash Sethi.
The company's plans include geographical expansion into Germany and West Asia; building more technology capabilities like automation; pump in more energy into existing markets; and expand wallet share with existing customers. InfoBeans also wants to close an acquisition. "It should give us more customers, new set of capabilities and open up new avenues. We are looking at a 40-50 person team, with expertise in user experience, automation, or in a new competency that we aspire to go in. Once we acquire such an entity, we can synergise our existing offshore servicing capabilities and try to grow from there. We are looking for the right kind of target," says Avinash Sethi.
M&A deals, however, are not in the scheme of things as of now. "We are not interested in exiting. We want to go on with business for the rest of our useful lives. We want to leave a legacy behind us," they say.
InfoBeans might have been a pioneering IT firm in Indore, but today the city hosts several IT majors, including Infosys and TCS. The promoters hope that these will prove to be a magnet for good talent, and turn Indore into a bigger IT hub soon.