Calsoft for strategic play post IDC divestment

THIRUVANANTHAPURAM: The California Software Company (Calsoft) which recently divested its stake in Informed Decisions Corporation (IDC) for $ 18 million, is looking to make strategic investments in tech companies operating in niche segments.

“We will continue to focus on our core areas of outsourced product development and enterprise applications, and also hope to pick up strategic stakes in companies with the proceeds of the IDC divestment”, Calsoft MD and CEO Sam Santosh told ET.

Calsoft had, through its 100% susbsidiary California Software Ltd (CSWL), held a 51% equity in IDC, which was divested last month for a consideration of $ 18 million. Mr Santosh said Calsoft had also earned $ 2 million through cash generated by IDC, for a total earning of $ 20 million from IDC in which it had invested only $ 1.6 million four years ago.

Mr Santosh said Calsoft would also use part of the proceeds from the IDC divestment to reduce the $ 15 million loan it had availed towards establishing the company’s Chennai campus.

He said the quick growth in IDC revenues since Calsoft picked up 51% of its equity was primarily owed to the decision to tap its target market using the software-as-service (SAS) model. IDC specialised in payment processing solutions for universities in the US, and when the solutions were being sold in the product sale model, only few universities could afford the steep cost of the solution.

After switching to the SAS model, IDC witnessed its customers growing from about 60 universities to about 220 universities, and revenues growing from about $ 7 million to roughly $ 11 million in four years.

Calsoft, which has development centers in Chennai, Bangalore and Mysore, and in California and Boston, besides marketing offices in the US, Europe, Singapore and India, has roughly 800 of its 1,000 employees based in India.