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Syntel CEO: Future Lies In Marriage of IT, Knowledge Process Outsourcing

After jumps in revenue and earnings in 2015, Syntel CEO Nittin Rakesh explains why his company’s future is tied to the marriage of IT and knowledge processing outsourcing.

Information technology and knowledge process outsourcing (KPO) are destined to combine into one offering, and Syntel is positioned to take advantage of that fusion, the solution provider’s CEO asserted Thursday.

"Customers are going to look for an end-to-end play that will deliver business outcomes," Nittin Rakesh said after Syntel reported jumps in revenue and earnings for the fourth quarter and for all of 2015. "We are really well placed."

Following the company's quarterly and annual earnings reports, which were released Thursday morning, Rakesh took questions from industry analysts and explained that Syntel will weather pricing pressures and scaling challenges in the IT market in order to gain position for a future that he believes will see an increased demand for solutions that fuse IT and KPO, in which a client outsources core information-related processes that are key to being competitive. As part of its managed services offerings, Syntel aids with KPO through both its professional staff and automated systems.

[Related: Syntel Rolls Out Robotic Automation Platform]

"We are in domain-intensive KPO businesses," he said, "and that has helped us build significant knowledge … in each of the industry verticals that we play in.

"We think (that) when you combine automation, business knowledge and customer expectation of business outcomes, you will see a very different kind of service emerge.

However, Rakesh said Syntel - No. 36 on CRN's 2015 Solution Provider 500 list - is just starting on its journey toward creating a service that can deliver end-to-end outcomes, even though 2015 was its "favorite year," according to Rakesh.

He said Syntel is focused on assisting its clients bridge the "digital divide" and reconcile the technology gap between customer-facing applications the company's clients have and their back-end systems to create an experience that "meets the expectations of digital-era consumers."

Thanks to Syntel's managed services, clients can take advantage of that experience, and thanks to the company's robotic automation platform, SyntBots, which was introduced in February 2015, Syntel can take on much more of its clients' operations while it manages, migrates and modernizes a client's backroom operations to a newer, more digitally mature back-end system.

"We are living in a dual-speed world," Rakesh said. "You have to run your core applications but you also need to migrate to a modern infrastructure. If you bundle it together in a managed services construct, customers feel a lot better because you are removing a lot of the operational risk and the execution risk while giving them efficiency."

In its first year, Rakesh said the SyntBots platform has been just as disruptive as he predicted it would be, and that the technology has seen adoption from all of its customers, including the newest additions to its client roster.

In its quarterly and annual reports, which were posted before the stock market opened Thursday, Syntel reported $254.6 million in revenue for the quarter - up 8 percent from the year-ago quarter- and annual revenue of $968.6 million - a 6 percent increase over 2014.

The Troy, Mich.-based company also reported $74.24 million in earnings this quarter, up from $70.7 million in the fourth quarter last year and annual earnings of $252.5 million, which rose from $249.7 million in 2014.

Syntel also reported that it’s sitting more than $1 billion in cash, most of it being held in India.

Rakesh said the company has not decided what it will do with the cash, but noted that giving some back to its U.S. shareholders would subject the company to a lot of taxes and that Syntel is considering acquisitions that would fit the business in growing sectors such as health care and financial services, or in growth regions such as the United Kingdom.

Moving forward, he said the company is poised for even more success. "We are just getting started on this journey," he said.

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