Execution success in a challenging macro environment:
A) Client Base
Client base continues to grow with 50+ IT services clients across 20+ countries with top-5 client’s
contribution of 36% and top-10 at 53%. This demonstrates the company’s focus to avoid key client
concentration risk.
Won multiple new projects in Q2 including onboarding as an IT vendor with a leading bank in UAE.
An existing BFSI client (one of the key private banks in India with which engagement started last
year) has seen the project ramp-up. Such large enterprise clients win while not very significant at this stage, augurs well for future
trajectory.
B) Business Growth
*Growth remained broad-based and especially strong in the USA geography in the area of AI/ML.
*Strong new wins have offset limited downsizing in two projects of existing clients. Overall,
company continues to have big pipeline of leads as well as order book to sustain Industry leading
growth.
*Ksolves also gained business by replacing eastern European IT vendors of two North American
clients due to ongoing war concerns. The project pipeline has few more such transition
opportunities.
*Employee addition during Q2 was muted (370 as of Sep’22 end vs 359 at Jun’22).
Growth in coming quarters will be a function of
*Employee growth which should drive half of the revenue growth.
*Higher billing rate by upgrading tech stack (current average billing rate of ~22 USD per
hour)
*Higher utilization (current utilization levels of 63% at the company level at 73% in service
division) has scope of further improvement. Ksolves also has a large product division and
higher bench strength as it relies on heavy junior level employee layer hence any peer
comparison should be discounted for this focused business strategy.
C) Reasons for sustained high profitability *Ksolves currently works as 100% offshoring model. Its tech stack is skewed towards niche
technologies in AI/ML space.
*Pyramid structure of employee has thin middle layer which results in lower employee cost base.
Ksolves is able to sustain this by heavy focus on hiring fresher and investing heavily in their on-job
trainings and/or stint in product division.
*67% revenue is USD denominated and hence recent USD strength worked as tailwind.
*In near future, Increased business travel, marketing expenses and office re-opening expenses will
create downward pressure on margins but that’s likely to be offset by better operating
efficiencies. Additionally, subdued attrition pressure in recent months will help in sustaining
profitability.
D) Investments for sustained growth:
*Ksolves had marketing presence in two recent leading Industry events (Annual Salesforce event –
Dreamforce 2022 in San Francisco and TechEx’s AI & Big Data Expo North America 2022 at the
Santa Clara, CA). More such participation is planned.
*All three offices (Noida/Pune/Indore) continue to see an increasing trend of employees coming
back to office. Work from the office allows the company to better train new resources and
improve employee engagement as well as productivity.
*Continue to invest heavily in building top-class teams via lateral hires in key focus areas of Data
Sciences/Big Data/AI & ML.
*Freshers hiring is getting ramped up too especially via campus drives to support growth and
backfill attrition.
*Product division working on a Saleforce Product launch in Q4 which if well received by market can
have meaningful growth implications for both products and salesforce services division.
| Subscribe To Our Free Newsletter |
