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Integrator MphasiS Building Stronger Presence

It's time to start paying attention to MphasiS, an up-and-coming integrator with an anticipated $170 million in sales for its fiscal year ending this month -- 70 percent of which is generated in the United States.

It's time to start paying attention to MphasiS, an up-and-coming integrator with an anticipated $170 million in sales for its fiscal year ending this month -- 70 percent of which is generated in the United States. In an exclusive interview with VARBusiness, Jeroen Tas, co-founder and vice chairman of MphasiS, discusses the company's most recent acquisitions, its competitors and what it anticipates for its future.

MphasiS was founded in 1998 as a California-based IT services shop specializing in the financial-services vertical. The company relocated to New York in 2000, the same year it was acquired by BFL, an Indian company, although Tas and co-founder Jerry Rao took over management of the company.

"Indian regulations required that BFL took us over, and not the other way around, because the firm was listed on the Indian stock exchange," Tas says. Company headquarters are in Bangalore.

Since then, the company has grown through services, which represents 60 percent of its revenue, and business-process outsourcing (BPO), which represents 40 percent and is its fastest growing segment.

"It's growing at 70 percent a year, and we're looking at pretty steep growth for the next couple of years," Tas tells VARBusiness. "And 85 percent of our BPO revenues are in financial services."

For its last fiscal year ended March 2004, the company posted $135 million in sales. Tas says the United States is the company's most important market. Next year, he anticipates the company will post $250 million in sales.

Part of that steep sales climb is attributable to its acquisition spree: The company has bought three companies in less than one year. The most recent purchase of Eldorado Computing, a health-care benefits management solutions firm based in Arizona, puts the company in the middle of a new (for it) and increasingly popular vertical--health care. It bought Eldorado for $16.5 million in an all-cash deal.

Eldorado, which is profitable and has annual sales of more than $10 million, specializes in claims processing and benefit management solutions for the health insurance industry. Its 128 customers include third -party administrators, HMOs, insurance companies, self-funded employers, preferred provider organizations, associations, managed care organizations and unions.

"The strategy behind the acquisition is that Eldorado allows us to make IT and BPO one flow of business," Tas explains, noting that he want to make MphasiS an "extension of the client environment" by handling both in-house IT and outsourced functions.

In addition, MphasiS charges its customers per completed claim, thereby being paid by performance and not work hours, a model that could set the BPO world on its ear.

"People have been doing it in other industries. We have to build in the efficiencies," the vice chairman says. "And Eldorado has the platform to do it."

In addition, in February MphasiS also bought London-based Princeton Consulting (UK) for $14.4 million. Founded in early 1997, the company has approximately 100 employees and is seen as a window into the U.K. BPO and IT markets for MphasiS. And last April, the company acquired India-based Kshema Technologies for $21 million.

Who does Tas believe are MphasiS's competitors?

"In India, they are, among others, Infosys, Wipro and Cognizant," he says. "In the United States, it's IGS and Accenture. We want to beat Accenture in selected verticals -- like financial services, with a cost structure that is a fraction of Accenture."

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