SLK Software confident of 40% growth this fiscal

The world of technology is changing very fast with AI emerging as the key focus areas. As generative AI-powered tools make waves across industries, IT firms are aggressively integrating these tools into their products and platforms. Such integration is making their offerings more suitable for current needs. SLK Software – a Bangalore-based global technology services company working with customers in the BFSI segment, is one such IT firms with emerging technologies like AI, ML, data analytics as its key focus areas. The company works with several Fortune 100 and Fortune 500 companies in the BFSI space. In a conversation with the Bizz Buzz, CEO of SLK Software, Ajay Kumar said that despite all the talks of softness in demand, the company is confident of achieving close to 40 per cent growth rate in the current financial year. He said company’s focus on its products, platforms and IP-led services is putting it on a good stead for future growth. The company with a good amount of exposure to regional banks in the US is seeing the demand for technology services remaining intact despite recent worries

How is the overall demand in the BFSI (banking, financial services and insurance) space as the commentary from the top IT services companies doesn’t sound good? How optimistic are you on growth prospects in the BFSI space?

From SLK and our interactions with clients, we definitely see that our clients are realising that technology is the business. As they realise that the spend is definitely increasing whether it is in the banks or in insurance. And the spend is increasing because of two-three reasons. One is banks, insurance and other financial institutions are heavily regulated. When you are heavily regulated, you need a lot of quick action to data for giving that to regulators and show that you are compliant. That depends on technology. This spend is not declining. Rather, this segment continues to be robust. The second thing is that most financial institutions have complex layers of technology and now, they are seeing technologies like artificial intelligence (AI), cloud can improve productivity. So, they are interested in seeing how automation and AI among others can improve the efficiency with their complexity going away. All these financial institutions are trying to acquire new capabilities. That is reason that many of our customers have adopted new platforms and tools as they want to be more customer-centric, cross-sell and upsell products and services. While a lot of legacy spend is going away, a lot of spend is coming in new areas.

Market experts are saying that a lot of digital spends are being held back by clients. Do you see that kind of phenomenon playing out?

We are not seeing that. At SLK, we are seeing significant growth in our banking, financial services business. For instance, we have seen commentaries around regional banks in the US. We play a lot in the regional banking space and our customers are trying to improve things leveraging technology. So, the technology spend is definitely there. If as an industry, we can drive AI, automation and analytics organisation and help clients, then opportunities are there. However, if you are looking at a typical offshoring opportunity, then those days are getting tougher.

Is your growth optimism driven by the platforms and products that you offer?

Yes. Our growth is primarily driven by domain, platform and IP-led services. So, we just don’t lead by services but we lead by domain knowledge. We have the knowledge of the process, sub-process and others or banks, insurance and related industries. We are very focussed on industries we play and for each of those, we have created platforms. We are now investing on these existing platforms with new AI capabilities as ChatGPT kind of tools come to the market. So, I continue to see that our ability to disrupt will be through our platforms and through the domain knowledge, we have.

Traditionally, the products and platform businesses are prone to cyclicality. How is the case with you?

I will not say that we are always immune to the cyclicality. But we are just not a product company. We use these products to provide services that solve business problems for our customers. As the new AI capabilities are shaping up, we at SLK as an agile organisation are trying to build an AI-driven organisation. So, the proposition we have for our customers is fundamentally differentiating. Let me give an example. You know that most of the IT services industry sustains by providing maintenance services- application maintenance, infrastructure maintenance. These deals are multi-year deals. Through our platform, we are enabling our customers to remove 60-70 per cent of the work. So, this helps the customers to change the model from reactive to predictive. That creates a very differentiated capability.

Can you throw some light on the kind of business growth that SLK Software has achieved in past years? What is your level of collaboration with system integrators?

Actually, we have taken business from system integrators. We compete with tier-I companies because we work with customers who are in Fortune 100 and Fortune 500 lists. We are consistently rated high and in our 22 years of history, we have not lost a single customer. In last two years, we have grown with a CAGR of 35 per cent. That gives a lot of confidence that our strategy of domain, platform and IP-led services is helping us to expand the industry and position in a different way. Of course, our customer engagement stands out and recently, we have celebrated 20-years of our engagement with a large bank. That kind of relationship is only growing.

You said that SLK Software has a good exposure to regional banks in the US. Can you give us some view on the kind of exposure and what are your growth expectations?

In percentage term, half of our business is in the banking services and we are expecting a 30 per cent growth in that business this year. This growth is primarily is platform and domain-led. We are seeing that the AI strategy is really changing the game for us. As far as region is concerned, we are more optimistic in the US than Europe. We are a much younger company in the European region. Specially, our focus in much more in the UK and we are now expanding in the eastern Europe, and Nordics. We don’t have many customers in India. As the US is such a big market, our view is that we can grow faster. This year, our ambition is to grow close to 39 per cent.

What are your hiring plans for this fiscal year?

We will definitely hire given our growth rate. But we are internally discussing how much of it can be done through AI for productivity improvement. We strongly believe in the partnerships with our customers, especially in the banking space. Another significant part is that our attrition rate is very low. We are in low teens. So, it is a very healthy situation where we are managing our utilisation, innovation and people.