Mumbai:CMC Ltd, a subsidiary of Tata Consultancy Services (TCS), is aiming to enhance overseas revenues and scale up its IT education business within the next two to four years. "Currently, we derive 35 per cent revenues from overseas operations. It would grow up to about 50 per cent in the next 12-18 months," Mr R. Ramanan, CEO & Managing Director of CMC, told Business Line. The company expects US revenues to account for a substantial proportion of overall revenues in the next 12-18 months.

In doing so, CMC will not cannibalise into TCS' revenues as most of CMC's offerings are marketed to overseas customers via the parent company, added Mr J.K. Gupta, Chief Financial Officer, CMC.

High margins on international engagements vis-À-vis domestic contracts have prompted CMC to strengthen its foothold in overseas geographies such as the US. "Even after factoring in the strengthening rupee, international business affords margins of around 25 per cent. Domestic margins for CMC are in the 8-9 per cent range," said Mr Gupta.

The appreciation of the rupee against most global currencies, predominantly the dollar, has been the major pain point for theIT industry.

However, Mr Gupta says that CMC has higher dollar expenses compared to most IT companies, owing to imports of equipment for its domestic business. This negates any negative impact of the currency movements. CMC's import bill for fiscal 2006-07 stood at Rs 205 crore. In the same timeframe, CMC's overseas earnings were to the tune of Rs 122 crore.

About 10 per cent of CMC's international business comes from TCS, which is billed in rupees. CMC engages with TCS in areas such as application development & maintenance and infrastructure support, added Mr Gupta. This further enables protection against unfavourable currency movements.

Separately, CMC intends to cash in on the increased interest for IT training - both in India and abroad - through its education technology strategic business unit. For CMC, the education space presently contributes about Rs 40 crore or 4 per cent to overall revenues. "We are looking at a 100-150 per cent growth in our education business in the next 3-4 years. It has the potential to touch a 3 digit number (from the present 40 crore) in this timeframe," said Mr Ramanan. With IT being taken to the rural areas of the country, education in niche support areas such as infrastructure services might soon outpace demand for programming related training, feels Mr Ramanan. In this space, CMC operates through a franchisee model and has 150 franchisees across India.

There is a lot of demand from geographies such as China, Latin America and eastern Europe, as they wish to replicate the India IT business model, said Mr Ramanthan.

Adith Charlie