The lockdown has urged cloud skeptical customers show enthusiasm on cloud adoption to ease Capex cost: Sify

The biggest lesson for the market from this lockdown is that there is no escaping the digital economy of tomorrow. Sify’s future is in enabling that for our clients, says Raju Vegesna, Chairman, Sify Technologies.

The ICT service provider, Sify has reported revenues of Rs 22,952 million for the financial year 2019-20. Its EBITDA for the year stood at Rs 4,076 Million.

While releasing its financial earnings Raju Vegesna, further said, “Every adversity presents an opportunity to rethink the way we do business. For some time now, Sify has been increasing the level of automation across our entire suite of services. And during the ongoing lockdown period, we have been able to perform remote commissioning and maintain high service levels without any major impact. I am incredibly proud of my team who are continuing to rise up to the challenges faced by our clients every day.”

The current situation resulting from the nationwide lockdown has curtailed industry growth, and Sify expects customers to spend mostly on ‘must have’ services, and not on ‘nice to have’ services, as India emerges from the lockdown.

Sify believes that customers will look for technology and contracts which are flexible and agile. Overall, Service Providers whose business models are consumption-based will get more attention from customers. Service Providers who can deliver “cost benefits” will have an advantage in customer engagements more than ever.

Projecting the future post lockdown, Cloud Services, Network Access Services, Security Services, and eLearning would be the prime growth area for Sify.

During the year, Sify had expanded its GlobalCloudConnect (GCC) platform to provide enterprises with high-performance networks to enable hybrid-multi cloud on all major hyperscale platforms across the key metros. Sify had also continued to see wins in the SD-WAN category and its business also saw steady progress in its IoT vertical. The focus around branch energy management saw wins largely in the retail sector.

Sify’s CEO Kamal Nath states that the current scenario under lockdown has created challenges in the short term and opportunities in the mid and long term for the company. As a Service Provider, Sify is currently addressing the upgrade and downgrade requirements of customers, based on the demand. “We are remotely managing mission-critical infrastructure of customers who are serving the core industries and consumers. The current situation has also stimulated conversations with customers on the need for scalable, flexible IT infrastructures which can be consumed on demand,” indicates Nath.

“We are seeing the Cloud skeptical customers showing enthusiasm on cloud adoption to ease their capex cost and cash flow. Organizations are reviewing how to provide secured and productive “work from home” deployment. As a Digital ICT Service Provider, we see this as an opportunity to further boost utilization of our investments and enhancement of our services revenue,” says Nath.

This year Sify bagged contracts from four prominent clients to have their workload migrated from their on-premise DC to multiple Cloud platforms, including Cloudinfinit, AWS, Azure and OCI. The clients were from a non-banking finance company, insurance, IT & ITeS, Retail, and Heavy Engineering and Chemicals verticals. Sify, in its earnings report, has also said that the top clients who signed up for its cloud-based supply chain management solution included companies in the energy, retail and pharma verticals.

Sharing more about Sify’s financial earnings, Vijay Kumar, CFO, said, “We had a reasonably good year 2019-20. The EBITDA growth has been healthy, while we continue to spend for the future – both in people and tools to increase our digital transformation service capabilities. The net profit is lower as the company is now subject to full taxes as past tax benefits have expired.”

As global trade shrinks substantially and overall demand and supply chain recovery is expected to take time, Sify is preparing the organization for new contracts to be slow to conclude as some of its clients are likely to take time to regain their momentum in the market, says Kumar.

“We continue to carefully manage our costs while ensuring that services to customers and their experience remain the best. We stay committed to our data center, cloud, and network-centric expansion projects, and will exercise due caution in terms of both timing and cost structure of these projects,” shares Kumar.

Considering the economic conditions and uncertainty on the timing of the economy normalizing, the Board did not recommend the payment of dividend this year and instead advised capital to be conserved and used for financing expansion projects.