Laser Soft holds head aloft
Date: Saturday , April 30, 2005
Laser-sharp dreams converge at Chennai and hope to capture India and beyond. That’s CMD, Suresh Kamath’s brainchild – the software product company – Laser Soft.
Born in 1986, Laser Soft’s focus is on product development for the banking and financial service sectors. After 19 years, the 520-employee strong Laser Soft has evolved to become the third most important player in the Indian Banking Software industry.
With over 5,000 installations in India and overseas, Laser Soft handles four core banking projects. The product offerings cover the entire range of Banking Operations that include Core Banking and 24 other specialized products.
A graduate from IIT Chennai, Kamath worked four years for two IT companies before the entrepreneurial spirit besieged him. Bravely trusting his instincts, he left his cushy job at TCS in 1986 and started a new chapter in his life.
Kamath surveyed the sectors, which held promise to him and zeroed in on two choices Banking and Health Care. It was a challenge to begin here without any domain knowledge. He scripted his destiny without any predecessors in this sector to regard as role models or competitors. i-flex, a well-known name now in banking solutions, did not exist in the country during the mid-eighties.
The First Steps
The beginning of Laser Soft’s incredible journey was with the State Bank of India (SBI) in 1986. At that time everything at SBI was done manually. Laser Soft approached SBI and the bank sensed potential.
It readily agreed to work with Laser Soft for automating its foreign exchange. “The first payment cheque to Laser Soft was from SBI for Rs.4000 and nothing after that gave me greater happiness,” recalls Kamath. Later, 52 different discrete modules were created for SBI.
Around the same time Apollo Hospital was approached and it gave an affirmative reply to the proposal of developing the hospital management software. It took three years for the completion of both SBI and Apollo projects. In 1990 all their products were overhauled for the market through re-engineering.
Until 1991, various projects for banks and hospitals were done but they realized that their resources were being stretched too thin and the shift to solely concentrate on banking was decided. But Kamath ensured that leaving the healthcare segment did not mean leaving its customers high and dry. Source code was provided to them along with training to understand the product.
In 1992-93, the association with Corporation Bank was the turning point for this fledgling company. The initial expectation was that Corporation Bank would buy 5 copies of the product; but after seeing the product they ordered 25. It was the fruition of two years’ effort to sell the product. Hard work always pays— within 6 months the entire bank was automated with Laser Soft’s products.
The Journey Gains Momentum
The company made profits in 1996-97. It took them 10 years to reach this stage where they had total banking expertise ranging from retail banking to treasury. Their first loan was about Rs.1, 80,000 from SBI to purchase 5 computers for the company. The next loan was for 16 lakhs to purchase more computers. Loans for working capital were never taken. SBI also provided loans in the initial years to buy office paraphernalia.
In 2000, Kamath knew that networking was the next big thing and hence decided to get into Core Banking. Models were developed for this and the platform used was Oracle and SQL COBOL. Around this time IL and FS venture invested 16 percent in the company for one million dollars, for the purpose of scaling up.
In 2002, Laser Soft ventured into the Middle Eastern market, as they possess a proliferation of banks. Laser Soft has four customers in this market including, Bank Muscat.
The next overseas targets are Africa, Europe and the U.S. Spreading its wings, partners now range from Wipro in India, Macro Soft in Oman to Tetra Soft in USA.
Further rounds of funding to obtain $2-3 million is the next step, as the company wants to scale up it’s marketing. Kamath knows that the ratio Laser Soft charges in comparison to the big players is 1:50. The big players spend the huge revenues generated on marketing. This is Laser Soft’s domestic challenge as it lags behind in the marketing department as of now.
He agrees that there is a higher amount of risk in making software products but the creativity and better output value that a company receives in the product arena was why he threw the anchor here. “Product companies are also good for the economy because it reduces the amount of imports into the country. It is not rocket science to figure the better option between making software products for banks indigenously and selling it to them for Rs.70 crore or the importing done by banks for similar products for Rs.300 – 500 crore. The damage to India is hence immense,” reveals Kamath.
An entrepreneur to be enterprising has to think long-term and not be weighed down by short-term difficulties. You must persevere to succeed. As Johnny Walker puts it – “keep walking.” A passion for ideas is a must along with implementing them. Referring to his trials, Kamath says “There is definitely a higher risk in the software products arena but if you think it’s your strength then go all out for it.”
This was why he ventured here as early as 1986. He blames the “I won’t take chances” attitude of today’s youth on our archaic educational system. Hence, the mental challenge is the hardest to overcome.
Solution for Competition
Kamath knows that desi competitors like
i-flex and Infosys are also looming competition but he is assured that the market is large and there is enough room for several players. He downplays the threat of clients preferring stable companies as their banking solution providers.
He underlines the fact that in the last 19 years his clients like Corporation Bank who shop exclusively with Laser Soft have used it’s products for 15 years with no problems. “That is a testimony to our stability,” proclaims Kamath.
He asks incredulously that despite their money power and manpower why is that the bigger players have come up with just a few products for the banking industry? This is where he believes that Laser Soft’s strength lies and that is in their smaller size. The larger you are, the slower it takes to move around, being a smaller mid-sized company means you can react to market forces immediately. Yes, David can take on Goliath.