hewlett packard globalsoft pvt ltd Management discussions

HEWLETT-PACKARD GLOBALSOFT LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS: Business Performance: Revenues: Total revenues for the year ended March 31, 2006 amounted to Rs.10,461 Mn, as against Rs.8,239 Mn in year ended March 31, 2005. Profits: Profit before taxes for the Financial Year 2005-06 was Rs.1,158 Mn as against Rs.1,252 Mn in 2004-05. The Profit after Tax for the Financial Year 2005-06 was Rs.1,001 Mn as against Rs.1,102 Mn in 2004-05. Dividend: The Company is in a growth mode and is desirous of utilising its cash surpluses for investing in the new facilities in Chennai and also for the expansion and upgradation of its existing campus in Bangalore. Hence, the Board has not recommended any dividend for the financial year 2005-06. Business highlights during the year: The year 2005-06 was a successful year for the Company as we experienced growth on multiple fronts. Company plays a significant role in Hewlett- Packards (HPs) global delivery initiative and today is a flagship center for HPs Global Service Delivery organisation .The companys high quality, cost optimised software services has helped HP win global application services contracts and is positioning HP as a credible and cost effective offshore application services player. Company experienced healthy growth in its business. There were significant wins for HP with global customers resulting in a large inflow of fresh projects for the Company. A significant part of the business growth also came through work extensions from existing customers, highlighting their satisfaction in our delivery. Overall, Companys new customers were evenly spread across the globe, and all service towers namely Application Services, Infrastructure Services, and Global Solutions/Foundation Services have each registered healthy progress. The trend seems to continue as the number of customer visits to Company has gone up nearly 40% over the previous year. During the year, the Company experienced severe cost pressures on account of salary increases to its employees and fringe benefit tax imposed by the Government of India. In addition, the Company has made significant investments in training centers as part of its overall campus hiring program. All these measures have had an impact on the Companys profitability during the year. New Initiatives: Another highlight for Company was its expansion to a new center in Chennai. The center commenced operations in June 2005 and will soon be moving into its new facility Olympia Technology Park. The center is now 500+ strong. Several initiatives were undertaken to improve the efficiency of internal processes like billing and resource management through the development and deployment of in-house solutions/tools. Significant investments were made for modernising the Electronics City campus infrastructure. We have added capacity for including another 2000+ people across 5 new blocks. A state-of-the-art Learning Center is under construction. Both the campus and our Surya Park facility in Electronics City have been equipped with control centers for security, access control and surveillance. EMPLOYEES: In terms of headcount Company continued to scale up and hire, train, transition and utilise the workforce efficiently. There were several employee focused initiatives including the launch of various activity clubs, employee newsletters and extended education programs aimed at ensuring an all-round satisfactory work experience for employees. THOUGHT LEADERSHIP: Along with growth in business, Company continues to grow as a leader within HP on service delivery processes. Company was successfully certified at SEI CMMI level 5 and also received the BS7799 certification, which is the worlds most widely recognised security standard. Companys IQMS (Integrated Quality Management System) has been adopted as the new HP Global Method for Applications and has been translated and implemented by regional centers. We have been mentoring various Centers and providing guidance on achieving certification standards. Companys contribution was pivotal in rolling-out the Centers of Excellence (CoEs) for HPs Application Services. The CoEs are strategic thought leadership engines that focus on innovation in IT technology, discipline and Industry processes and leverage the Global Delivery resources to ensure seamless delivery to customers. Company continues to play a leading role at both the regional and global levels of HPs technology landscape. It hosted the 3rd chapter of Techcon India in November; the event had unprecedented levels of international participation and attendance for paper submissions as well as senior management involvement. OUTLOOK: Companys priorities for the next Financial Year are growth across all the towers and this growth is expected to come from repeat business orders from existing key accounts through better servicing and also through acquisition of new customers. As always excellence in delivery and rigorous adherence to processes remain top priorities. To facilitate better customer management, Company is poised to have a more efficient Early Alert system that helps identify issues and resolve escalations speedily. Plans to develop more efficient resource management, disaster recovery and business continuity plans are also on the anvil. While the Company will continue to focus on sharpening skills across technologies, processes and project management, there are several new efforts being made under the new Year of Excellence initiative.