Chennai: "Since the majority of independent software vendors (ISV) use Microsoft''s product platform, it will be exciting and challenging to propagate the new Microsoft stack (Microsoft Vista and Microsoft Office 12)," avers 36-year old Pradeep Rathinam, president, Aditi Technologies.

According to him, the whole software eco system is dependent on Microsoft. Any fundamental change could transform the business dynamics. "A new software vendor may come with a new cost model. The future of the software vendor will depend on how he caters to the user experience and not the user interface."

The Bangalore-headquartered Aditi Technologies offers software product development or outsourced product development services. Apart from developing new products, Aditi is also involved in enhancing the features of an existing product or extending the life of an old product.

According to him, an ISV spends most of its research and development (R&D) budget on the existing product line while a small percentage is put on developing new software and maintenance of legacy one.

"Our approach is to show a prospect the benefits of developing a new software product at the shortest possible time that would change the cost, revenue and even the market dynamics," he adds.

The $40-million revenue Aditi has 600 employees of which 400 are in Bangalore and 200 are in the US. "We plan to add another 200 smart engineers. The head count increase will happen mostly in India." Here too there are challenges Rathinam says. "The shortage of skilled hands in the value chain has gone up. It is really a challenge to find suitable people to develop next generation software." The company has around 50 projects on hand.

With a target turnover of $100 million Aditi is expanding its US presence. "We will enter the North American market through new marketing offices in Texas and California," he says.

Married to Sharmila a business and financial analyst, Rathinam has two sons Sumer and Rish. He talks to domain-b on future strategies. Excerpts:

How is Aditi different from other product developers?
We target ISVs who are in the turnover bracket of $50 million - $500 million. There are several players in this band. They will not set up captives even in India as these have its own risks and challenges. That is the sweet spot for us. It should be said that we are not mere vendors. Our approach is different as we also consult our customers about sales and marketing apart from product development. Our proposition to our clients is not cost oriented but business generation. We discuss with them the possibilities of revenue growth, cost management and transformational revenue. The focus is on time to market giving the first mover advantage to our clients. A good chunk of our revenues come from new product development.

How many new clients have you added in the recent times?
We have had rapid customer acquisition in the recent times. In the last five months we have added 17 new clients.Are your contracts mainly fixed price ones?
Most of our contracts are on retainers. We do have contracts on fixed cost basis. For ISVs it is better to have people like us on retainer basis or else they will be losing a whole set of people who have the end-to-end product knowledge.

Are the billing rates for companies like yours going down?
It is not so. On the other hand it is going up. Low-end services like software testing may feel some pricing pressure. But in our activity, which is high end, the billing rates are up. In some cases it is even similar to that of US rates. With the exchange rate fluctuating the rates are bound to go up further.

On the market for software as a service….
Software as a service is not just running the software on a pipe. It is has different set of business model propositions. The mindset of the software vendors decides whether to go for a hosted service. And they are now open to this.

What will be the spin off effects of companies like you being present in India?
It will surely have a positive spin- off effect for the domestic market. The experience of developing products for advanced market will surely grow the domestic software product market.