Aliso Viejo’s UST Global Inc., a technology outsourcing company with big operations in India, is getting ready to possibly go public next year.
UST Global isn’t deterred by a sluggish stock market and higher costs associated with being a public company, according to Chief Executive Sajan Pillai.
“We have plans to go public, and we are looking at the right timing,” he said. “We find the environment to be very good for the kind of business we do. Our intention is to continue to grow and to give some liquidity to our associates.”
The company, which has some 100 workers here, is reshuffling its executive suite, organizing the company into business units and gearing up for an initial public offering, which could happen sometime in the second half of 2009 if the company reaches the $500 million yearly sales mark.
Pillai declined to say what UST’s current annual revenue is.
Going public “is expensive, more expensive than ever before, so we want to get to a critical mass,” Pillai said. “We had to create a leadership structure to sustain this type of growth.”
Four members of the company’s team were promoted to executive roles, including Pillai, who previously was president and chief operating officer.
Satendra “Dan” Gupta, who was chief executive for four years, stayed on as chairman. Three other executives are set to be chief financial and operations officers.
Pillai said he thinks Wall Street could embrace UST’s profits.
“It’s a highly valued business because the top companies in the industry get around 15% to 20% net margins,” he said.
UST does traditional business consulting and handles services outsourced by companies.
It competes with consulting kingpins such as Accenture Ltd., Electronic Data Systems Corp., which is set to be bought by Hewlett-Packard Co. for $14 billion, Deloitte Consulting LLP and others.
It also squares off with big Indian outsourcing operations, including Infosys Technologies LLC, WiPro Ltd., Tata Consultancy Services Ltd., a unit of Tata Group, and Satyam Computer Services Ltd.
Selling Services
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Pillai: looking to go public after reaching $500 million sales goal |
UST has a different approach, according to Pillai. The company aims to sell more services to fewer customers,about 100 at most.
“Our model is fewer customers, more attention,” he said. “We are trying to acquire a few customers and invest a lot of time with them so they stay with us. We make a tremendous amount of upfront investment and our customers love the attention and focus.”
UST is seeing “incredible demand for computer programmers and engineers,” Pillai said.
“There’s a huge need out there to build technology so our customers can run their companies efficiently,” he said. “They are spending a larger percentage of their revenues so they can build and maintain their custom technology applications.”
The company targets Fortune 500 companies in several markets, including healthcare, insurance, finance, media and entertainment.
Customers
Customers include Lake Forest-based Apria Healthcare Group Inc., Carnival Corp.’s Princess Cruise Lines Ltd. and San Diego’s Sempra Energy.
UST’s customers include two of the top five healthcare companies in North America and three of the top five movie studios in Southern California.
Another biggie is retail,UST counts three of the top 10 retail chains as customers, Pillai said.
The company got its start in 1999 with three founders and has grown to more than 5,000 workers worldwide, most in India.
It’s funded by the investment arm of India’s Comcraft Group, a company with about $6 billion in yearly sales that makes steel, plastics and aluminum products in East Africa.
UST has tapped India for a big source of its labor,it’s a large em-ployer there with operations at three sites.
Its biggest, with 3,200 workers, is in Trivandrum, at the southern tip of India near Sri Lanka. Another facility in Chennai has about 700 workers. A new building in Cochin has about 250 workers.
The company also has smaller offices in Ma-laysia, the Philippines, Hong Kong, Singapore and Canada.
The Indian sites are made up of primarily engineers who develop, test and maintain customized software for UST’s customers.
For Princess Cruises, UST manages its automated reservation system and network.
“They have the most complex cruise line reservation system in the world,” said Michael Zerkel, general manager of North American operations. “We maintain their entire application globally and augment their staff with our personnel.”
The company is continuing to hire at a rapid clip.
“What we are doing in order to scale at the pace we are talking about, we have to literally hire thousands of people,” Pillai said. “The growth is phenomenal.”
Locally, it’s looking to nab a chief marketing officer and an acquisitions specialist.
Next on deck is scouting a place to set up shop in South America and making a few acquisitions.
“I expect to have maybe three or four acquisitions in the next two years,” Pillai said.
