Their work is not niche (Most IT services is commodity anyway). RPA and chat bot that they showed on the call – people have done these things ages ago.

I feel their products are not really products, but solution accelerators. But good to see a company of this size having them and thinking of industry solutions rather than plain staff augmentation.

To one of the questions, CEO said their revenue is not linear with headcount. My view is that the margin expansion is the result of more work from US, rather than a differentiated model.

They are riding on the demand for service opportunities for Microsoft suite implementation. CEO mentioned services/implementation opportunity being 5-7x of license revenue. I worked in a large consulting provider in their Salesforce practice – they used similar number for calculating TAM.

The market for Microsoft suite implementation is huge. Accenture had a dedicated subsidiary for Microsoft implementation called Avanade. If you google you will see that Avanade revenue is $3 Billion +.

The reason I feel All E Tech will grow at reasonable pace till demand for Microsoft suite sustains, is as follows –

1. The clients they target are small and not serviced by biggies.
2. Big dampener for large IT services right now are the GCCs (captives) that clients are setting up in India. The kind of clients that All E Tech would be keen to get the work done by third parties rather than setting up their captives.
3. Since they are 100% Microsoft shop, Microsoft will push some work to them. CEO alluded to this in the call. I am aware this is a practice followed in the industry, based on my experience in Salesforce landscape.

I like that they publish quarterly results (as SME, they don’t need to) and hold con calls. I like the conservative nature of CEO. I also like that their top management has stayed together for nearly 20 years.

Need to closely monitor how they manage employee cost as they grow. After the madness during COVID years, last couple of years have been benign for talent cost escalation. If situation changes, small companies will find it very hard.

In summary, they are riding Microsoft growth and focusing on a segment of clients that are less likely to be served by biggies. We need to watch how they manage growth along with talent cost.

Disc – invested with a small position.