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Bucks in GIS
Monday, July 1, 2002
B.V.R. MOHAN REDDY IS making good money with his firm InfoTech Enterprises at a time when others are finding it almost impossible to sail through the downturn storm.


This February saw one of his biggest clients, Pratt & Whitney, visiting his Infocity office in Cyberabad to become part-owner of his enterprise.


Pratt & Whitney, a global leader in the design, manufacture and service of aircraft engines, spacecraft propulsion systems and industrial gas turbines, picked up an 18.4 percent stake in InfoTech Enterprises by acquiring 10 million shares at $6 per share.


Reddy is delighted, and why not? His company, which is into computer-aided design (CAD) and geographical information system (GIS) conversion, performed exceptionally well during the year ended March 31, 2002. The figures speak for themselves: the company claims its total income rose by 67 percent to $21.2 million from $12.7 million the previous year.


So, what is GIS? Simply put, a GIS combines layers of information about a place to give you a better understanding of that place. What layers of information you combine depends on your purpose—finding the best location for a new store, analyzing environmental damage, viewing similar crimes in a city to detect a pattern, and so on.


Now Reddy has more reason to be delighted. Sudhir Sethi, formerly with Walden International as a General Partner, a global venture capital firm focusing on technology investments, now sits on the board of InfoTech as President and Executive Director. Arguably, Sudhir is the first venture capitalist in India to join the company he funded when he was with Walden.


Evidently, Reddy seems to have mastered the art of roping in the best resources possible for his firm. He attributes this to his career spanning 25 years in the computer industry, which included stints with DCM Refrigeration, MICO-Bosch and HCL Computers.


A decade ago, Reddy foresaw the potential GIS and CAD held in India, with governments and companies spending millions on the collection of geographical information. He established InfoTech on a 'dining table' from his two-bedroom apartment in Jubilee Hills, Hyderabad. Today, it's a different story. He sits proudly in his sprawling 170,000-square-ft office, which houses 2,100 employees.


"I started InfoTech with the agenda of being different, not part of a crowd. InfoTech has created wealth for me and my employees, but that doesn't mean that I should turn into a spendthrift," he says.


Recent estimates reveal that global investments in GIS technologies by state and private sectors are between $3.3 and $8 billion, with the annual growth rate touching 30%. "The GIS market can broadly be categorized into three segments: software, hardware and services. U.S firms dominate all three segments," explains Reddy.


It looks like luck is on India's side, because trends suggest that the U.S and European markets are offering attractive GIS services projects to India. What's more, GIS firms from the U.S, Europe, Japan and Australia have either started operating directly, or are subletting work to Indian firms.


Most firms, including Reddy's InfoTech, have exited the U.S- and Europe-centric markets of data conversion (this includes converting paper maps, aerial photos or remote-sensing images to digital data in GIS formats).


Today, Reddy has big names like Advanced Graphics Software GmbH, Germany, besides InfoTech Enterprises Europe, U.K, and InfoTech Software Solutions, Inc., U.S, under his belt. The company also manages offshore centers of excellence for industry leaders like Pratt & Whitney, Tele Atlas North America and Triathlon.


The Japan Potential

InfoTech recently clinched a deal with E&M Co. Ltd, Tokyo to serve as its exclusive marketing partner in Japan. Reddy claims the deal with E&M is expected to generate over $1 million in business for InfoTech from Japan alone during the current financial year.


After closing three acquisition deals last year, the company is now focusing on entering into a long-term contract with the Noida Power Company near New Delhi.



The Challenge

Unfortunately, the two stumbling blocks that prevent the widespread use of geographic information in India is not technical, but political and organizational. It is almost impossible to access any government-generated data.

Only those that are close to the government machinery can access the data. Maps of the 'restricted' areas are not readily accessible either, and aerial photography is virtually prohibited. Digitization of the Survey of India toposheets can be carried out only by a few governmental agencies.


Worse, there is lack of awareness among the decision makers at all levels. "In India, the geographic information arena is still immature, with a broad set of issues crying out to be resolved," says Sudhir Sethi.

Obviously, there is no cohesive GIS community that can take up these problems with the top brass of the government. Indian firms are unprepared to take on international competition in the higher value-chain segments.

Despite all odds, Reddy is busy transitioning the company from horizontal GIS and engineering designs solutions to different verticals like manufacturing, utilities, telecommunications, transport, retail, financial services and local government markets. But the major chunk of revenue for InfoTech comes from GIS services. Surely, that’s another reason why Reddy should be delighted.

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