The main reason for the merger was the fact that while ECapital had the products in place, LES had the manpower with the requisite skill sets and an ISO certification in place (which could take ECapital another 18 months to get. The contributions made by each company to the merged entity would be as under:
ECapital was set up with a capital of $8.5 million 70% of which were pumped in by Chase-Oppenheimer and the balance 30% by the employees.
While LES has 360 employees, 110 of which are based in the USA and the rest in India, ECapital has 85 employees.
LES anticipates revenues of $ 4.1 million in the quarter ending March 2000 ($ 16.5 million for the full year) while ECapital anticipates revenues of $ 4 million during the same period ($ 5 million for the full year). For FY2000 the combined entity would have revenues of Rs 21.5 bn.
LES will be taking in 100% of the ECapital Bermuda, which owns the Indian venture through a Mauritius company. Besides, ECapital Bermuda holds 100% in ECapital USA, 51% of Team ECapital UK, 51% of ECapital Sports and 100% in ECapital GmbH.
The merged company has adopted the EFQM model for its HR practices and aims its employee attrition to be less than half the industry rate.
Suresh Rajpal explained that with industry employee attrition rates at 25%, it means that for every 1000 employees a software company has, every year 250 people leave the company. If the company were to aim at a 50% growth it implies the hiring of 750 people every year just to maintain targets. It gives a tremendous competitive advantage to the organisation if it were to reduce the rates of attrition to half the industry level. Only satisfied employees can satisfy customers.
The company has set specific employee satisfaction targets and customer satisfaction targets as per the EFQM model.
The merged company is aiming at a SEI CMM Level 3 by April 2000, Level 4 by April 2001 and Level 5 by April 2002.
Rajiv Mathur COO ECapital made the presentation on the market. He focussed on the internet being accessible through the mobile and said that the company is focussing on tapping this market. He pointed out that
- the information and business services portal market is estimated at $ 21 bn by 2001.
- The e-business and consultancy market (in which the merged entity plans to venture in the foreseeable future) is estimated at $ 3 trillion by 2001 in both the B2B and B2C areas.
- The process application integration and middle ware market is estimated at $ 4.3 bn by 2003.
ECapitalís clients include Hewlett Packard, Texas Instruments, Chase and Lara Technologies.
Its competitors include Hughes Software, Cambridge Technology Partners and Sapient Technologies.
On the future