- 14 August 2003 12:13
Software AG and iGate Global Solutions set up joint venture in India
· Business: Application Development, Project Services, Application Management and Maintenance Services · Lower costs and higher flexibility · Enhanced skills for new business segments · Start of operations: October 2003 · Initially 50 staff, with option to increase · Software AG will hold 51 percent, iGATE GS 49 percent of equity
Darmstadt/Bangalore, August 12, 2003 - Software AG (Frankfurt stock exchange: SOW.ETR) and iGate Global Solutions (a subsidiary of iGATE corporation; Nasdaq: IGTE) have agreed to jointly set up and operate an offshore development and service center in India under the name Software AG (India) Private Ltd.
SAG India will focus on services for application development (ASF), application management and maintenance (AMS) and professional services projects (PSP). The joint venture company will be located in Pune in the Region of Mumbai (Bombay). Operations are planned to start in October 2003 with an initial workforce of about 50. The number will be increased as business develops.
The German/Indian joint venture is in line with Software AG’s strategy to develop and market new solutions in addition to its current technology product portfolio. The XML technology leader has initiated the development of solution platforms for mobile computing and content management. The next step is to build applications on top of them, serving general (horizontal) and industry-specific (vertical) needs. SAG India will concentrate on this area in the initial phase of its operations.
“Speed is a crucial factor in the field of standard applications. The professional experience of iGate GS will accelerate the process of going to market for our new solutions,” explains Dr. Peter Mossack, Software AG’s CTO and member of the board, who will be the chairman of Software AG India.
SAG India’s second business line will be project services. The company will provide offshore and onsite service engineers and programmers to complement Software AG’s local teams worldwide, with initial focus on Europe and the USA. This will allow for a more competitive cost base in customer projects. Furthermore, especially in the startup phase SAG India can draw on a large pool of iGATE GS’s skilled IT labour in India, which will guarantee a fast ramp-up of the new company. This will immediately provide Software AG’s local teams with a highly flexible and broadly experienced skill resource pool, and with the ability to acquire larger projects than before.
Application management and maintenance services will be SAG India’s third business line. Partly in order to cut costs and partly because of lack of skills, corporations and government agencies are turning to outsourcing of the operational support for their business applications. Software AG has already made first steps into this business segment, and expects to build market share with the help of its new partner.
Commenting on the joint venture, Gerhard Watzinger, Chief Executive Officer of iGate GS, who was instrumental in structuring the arrangement said, "We see an extremely robust growth opportunity in the burgeoning German market and the joint venture with Software AG further reinforces our established position in this region. However, the objective of this JV agreement goes beyond Germany, and is to provide world-class, cost-effective IT services to customers globally and thereby make a substantial contribution to their businesses. We are confident of the synergistic strengths both partners bring to the table and believe that the venture provides a classic 'win-win' proposition."
The joint venture will be established as a private limited company. Software AG will hold 51 percent, iGATE GS 49 percent of the equity (300,000 Euro). Each of the parent companies will be represented on the Board by two directors. Operations will be managed by General Manager Rajan Bhatnagar.
Software AG took the decision after carefully analyzing the offshore markets. The target of lowering costs for software engineering in solutions development and projects was the trigger to look for offshore resources. However, the offshore partner also had to meet Software AG’s high standard of quality, and add skills that complement the leading technology know-how in the field of standard applications and outsourcing. Last but not least, the joint venture partners should be of equal size to provide a similar level of management attention.
iGate GS and Software AG are a perfect match. Both expect to draw substantial synergies from the partnership, which is laid out for significant further growth, a long business relationship and expansion into other offshore markets.
Please visit us on the Internet: www.softwareag.com
Software AG is based in Darmstadt, Germany. Founded in 1969, Software AG continues to be Europe's largest and a leading global provider of system software and services enabling enterprise data integration and management. Software AG's products control the central IT processes of thousands of renowned companies worldwide including Lufthansa, Siemens, Citibank, Merck, DaimlerChrysler, Sony, BP and Telefonica. Software AG develops products and solutions that support the XML (Extensible Markup Language) standard. XML simplifies the exchange of documents and data as well as the integration of cutting-edge Web applications into traditional IT architectures. Software AG works with such sales and technology partners as Tridion, Stellent and IXOS. In 2002, the corporation achieved 475 million euros in total revenue. Software AG has offices in over 70 countries and currently employs a staff of more than 2,700.
iGATE Global Solutions (formerly Mascot Systems), a subsidiary of US-based iGATE Corporation, is a leading global offshore IT services company. IGS provides strategy, implementation and operational solutions in the areas of Business Process Outsourcing, Data Management, Business Intelligence, Embedded Systems, ERP and Enterprise Application Integration. IGS uses its proprietary solutions suite, SmartAPPSSM, as the framework for its distributed delivery. The Company employs over 3000 people in 19 offices, which include 6 Offshore and 2 Offsite Development Centers. IGS operates across 12 countries and services over 100 clients globally. IGS is a BS7799 certified Company and is assessed at Level 5 of SEI CMM. The Company's stock is traded on the National Stock Exchange of India (MASCOT*), the Bombay Stock Exchange (IGATE GLOBAL) and the Bangalore Stock Exchange (IGATE). More information on IGS is available at www.igategs.com.
For further information please contact: Cheryl Kirgan, Software AG: 02 9463 6400 Shuna Boyd, BoydPR: 02 9418 8100