About Orient Technologies Limited

Orient Technologies is an information technology (IT) solutions provider headquartered in Mumbai, Maharashtra incorporated in the year 1997. Over the years they have built deep expertise to develop products and solutions for specialised disciplines across their business verticals which are set out below:

• IT Infrastructure: Products and solutions include Data Centre Solutions and End-User Computing; 
• IT Enabled Services (IteS): Services include Managed Services, Multi-Vendor Support Services, IT Facility Management Services, Network Operations Centre Services, Security Services, and Renewals; and 
• Cloud and Data Management Services: Services include migration of workload from data centres to cloud.

Their business operations involve technologically advanced solutions for which we collaborate with a wide range of technology partners including Dell International Services India Private Limited (Dell) and Fortinet, Inc. (Fortinet) and Nutanix Netherlands B.V. (Nutanix). A key facet of their product and service offerings is their ability to tailor and customise their offerings to the specific needs of their customers. Their collaboration with their technology partners heightens their ability to design and innovate products and provide solutions tailored to specific customer requirements.

Their range of customised offerings and their ability to specifically tailor solutions to the specific needs of customers have enabled them to garner prominent customers across industries and they count leading public and private sector entities across diverse customer industries such as banking, financial services, and insurance (BFSI), IT, IteS, healthcare / pharmaceutical (Customer Industries). Their constant endeavour is to nurture every client relationship to ensure that it translates into a long-term association. They also continually engage with their customers to understand their requirements better to be able to provide more holistic services and to identify new areas where they can engage with them.

Their business operations are, currently, concentrated in India and their revenues are predominantly generated from India, including from various multinational companies and transnational corporations. They operate out of their headquarters and corporate office situated in Mumbai, Maharashtra, with sales and services offices located across various cities in India such as Navi Mumbai and Pune in Maharashtra, Ahmedabad, Gujarat, New Delhi, Bengaluru, Karnataka and Chennai, Tamil Nadu. They also have a branch located in Singapore.

Indian IT services industry
Majority of the revenue for the IT players are derived from key markets in North America and Europe, especially from the consumer and banking sector, understating the dependence of Indian IT players on the key markets. On account of the global slowdown, clients in the key markets have cut back on digital transformation spending. Indian IT players have matured and become resilient over time after witnessing major world-wide crisis in the last two decades. Post the Covid-19 crisis, IT players have resorted to measures such as improving productivity, providing newer tech services such as Generative AI to increase margin etc.

IT industry grew from the late 1990s when global companies like IBM, Microsoft came into the country. India provided the global players with abundant talent and cost reductions at the lowest end of the value chain. In a short span of time, Indian IT players started expanding their delivery networks and established various delivery centres in multiple locations to increase nearshore or on-shore services. With respect to products, IT players started to provide integrated service offerings providing full suite of cost saving options and confirming to the highest quality standards. Players also adopted outcome-based pricing model from the previous cost models like fixed price and T&M (Time and Material). Post the global financial crisis in 2008, companies followed a de-risking strategy, wherein instead of giving large deal orders to IT vendors, they moved to smaller deals, also to get price advantage. Another growth-driver post the 2008 crisis was the increasing regulatory compliance requirements in the US and European markets enabling IT to drive solutions. 

In 2010s, Indian IT players started bidding for large scale turnaround projects which was the domain experience of global players. To upgrade their respective tech capabilities, Indian IT players had to undergo changes in business processes. Post 2010, cloud adoption emerged as the possible solution for the IT transformation, to reduce operating costs and improve agility. The aim of IT players was changed from cost reduction to improved productivity with being able to manage new business demands. As the Indian IT industry reconfigured and matured, new trends emerged as part of the process. Companies shifted their focus & moved data in different IT systems available to company executives in real time and in a seamless manner. Indian IT players recognized the need to process real time data and integrate the IT processes with core business activities including company’s clients and suppliers.

Next set of disruptions that hit the Indian IT industry included digital services like automation, Internet of Things, cloud adoption among others. Companies started looking for digital transformation and wanted to become a digital enterprise. The advisory and design approach was provided by IT players, first deployed in a native cloud environment, and later deployed in the business. Digital and automation moved from point deployments to enterprise-wide adoption. Also, there was a shift in market buying patterns with “as a service” outsourcing growing at a faster rate as compared to traditional sourcing. 

While Covid-19 pandemic impacted economic activity across most geographies, IT services industry faced minimal headwinds. Top IT had a diverse portfolio consisting of various sectors which ultimately helped them in the pandemic. Also, banks faced increased regulatory oversight on account of pandemic, and since the sector contributed the highest revenue, IT companies faced lesser than expected brunt on account of pandemic. Post the pandemic, there was strong demand for IT services industry which helped the overall industry. Industries such as Banking, Telecom and Healthcare were particularly favourable for the industry. However, the pandemic taught the IT sector that it needs to invest more in digital skill and to pursue client diversification.

Data centre industry overview
Modern data centers have evolved from their traditional physical infrastructure approach. Infrastructure has shifted from traditional on-premises physical servers to virtual networks that support applications and workloads across pools of physical infrastructure and into a multicloud environment. Today, data exists and is connected across multiple data centers, and public and private clouds. The data center must be able to communicate across these multiple sites, across both on-premises and cloud. Even the public cloud is a collection of data centers situated at some location. When applications are hosted in the cloud, they are using data center resources from the cloud provider.

The migration from an on-premises data center to a cloud data center doesn’t mean moving everything to the cloud. Many companies have hybrid cloud data centers which have a mix of on-premises data center components and virtual data centers components. Depending on the model selected, an organization may be responsible for maintaining and securing more or less of their infrastructure stack. Data centre industry based on shared responsibility can be bifurcated as follows:

1. On-premises IT 
2. Co-location 
3. Hosting 
4. Infrastructure as a service (IaaS) 
5. Software as a service (SaaS) 
6. Platform as a service (PaaS)

India data centre and cloud services industry
Similar to that of global trends, the Indian cloud services industry is majorly dominated by the private cloud environment. However, the trend is changing with increase in adoption of public cloud given its low upfront and ownership costs thus reducing the overall operational costs for the company. In terms of adoption of public cloud, small enterprises lead the way when compared to that of large and medium enterprises given its lower operational costs when compared to other deployment models. Large enterprises adoption remains low given their existing on-premises data centres. Instead, they’re adapting the hybrid environment to as benefit from the advantages of public cloud.

As of fiscal 2020, the public cloud market is valued at ₹ 170 billion which has grown at a CAGR of 42% reaching ₹ 685 billion by fiscal 2024. This growth is majorly driven by accelerated adoption of digital services across sectors after Covid-19 pandemic. Further, the pandemic revealed underlying advantage of public model environment being more scalable and flexible when compared to other models, which played a vital role in increasing its adoption during the mentioned period. Going forward, initiatives and support from Government of India coupled with growing internet penetration is likely to speed up the adoption of cloud services and new technologies. CRISIL MI&A projects the Indian Public Cloud market to grow at CAGR of 23-28% reaching ₹ 1,250 – ₹ 1,450 billion by fiscal 2027.

Indian data centre industry is expected to grow at a CAGR of 30-35% between fiscal 2024 and fiscal 2027
From fiscal 2018 to fiscal 2024, the Indian data centre industry has seen a growth at CAGR of ~25%. This growth can be attributed to factors such as growth in internet accessibility, surge in e-commerce adoption, rise in digital adoption due government initiatives such as UPI and e-governance. Further, with increasing number of organisations adopting cloud infrastructure as a means of reducing their expenses has catered to demand growth of data centres during the aforementioned period.

Going forward, the industry is expected to see a CAGR of 30-35% between fiscal 2024 and 2027, reaching ₹ 240 – 280 billion by the end. The growth is enabled by increasing consumption of data, 5G rollouts across India as well as advanced in technologies such as IoT, Big data, Artificial intelligence and Machine Learning. In addition to thrust from government through initiatives such as data protection bill 2023, draft data centre policy, infrastructure status for data centre also drive the growth. 

Recently, various government organisations have brought in regulations aiding data localisation, these include RBI mandating data regarding payment transactions and KYC to be stored in India, SEBI mandating all its regulated entities to store their data in India. Further adoption of localisation by government and private entities would bolster the growth in the industry.

India’s Technology SME Industry
Medium, Small and Micro Enterprises (MSMEs) are small establishments which complement large corporates as suppliers or directly cater to end users. The National Sample Survey, 73rd round, dated June 2016, estimated that there are around 63.5 million MSMEs in India. Since then, the number of MSMEs is estimated to have increased further to around 70 million as of fiscal 2022. The MSMEs as of fiscal 2022 contributes to 29.2% of the GDP and gives employment to over 110 million people in the country. Further, in terms of exports they constitute 43.6% of total exports as of fiscal 2023, thus supporting economic development and growth.

As reported by NASSCOM, the India’s technology industry has more than 10,000 MSMEs catering to the demand through various solutions. These technology SMEs have been one of the major drivers of overall technology industry. This industry has evolved over the years from subcontracting and staff augmentation models to offering digital solutions to global clients. As of fiscal 2023, as per NASSCOM report, the technology MSMEs have diversified across geographies with their major portion of the revenue generated from the North American region.

India’s Technology SME industry to grow at a CAGR of 14-16% during fiscal 2024 to 2027
During fiscal 2020 to 2024, the Indian technology SME industry has seen a growth of ~23% and is estimated to have reached $ 19 – 21 billion by fiscal 2024. This growth is majorly driven by the increased adoption of technology and shift towards digital technology services such as cloud services along with increase in service offerings such as digital engineering solutions, process automation, new-age SaaS products.

Going forward, CRISIL MI&A expects the industry to reach $ 29.5 – 31.5 billion by fiscal 2027 growing at a CAGR of 14-16% from fiscal 2024. This is supported by growing need for digital technology services with specialised focus on technologies such as cloud computing, artificial intelligence, advance computing methodologies and Internet of Things. Additionally, increasing need for Offshore Digital first services partners for international companies and domestic SMEs catering to the requirements of integrating with platforms such as AWS, Microsoft Azure, Google cloud would act as levers.

IT hardware equipment industry in India
The domestic IT hardware equipment market has witnessed a ~10% CAGR over fiscal 2020 to 2024. The high growth has been driven by high consumption in the COVID years (FY21-22). Sudden need for digital connectivity during the pandemic boosted the domestic consumption. The growth was driven by domestic production of mobile phones which registered a CAGR of ~31.2% over fiscal 2016 to 2022 period. India has become the second largest mobile handset manufacturing nation globally and India has also become the second largest smart phone market in the world thus making India as the fastest growing smart phone market in the world. As per MEITY, over 200 manufacturing units for cellular mobile handsets and their sub-assemblies/ parts/ components have been set up in the country during the last couple of years.

The Computer Hardware domestic production (computer, laptops, tablets) segment registered 17% CAGR over fiscal 2020 to 2024. The strong growth in demand for computer hardware is due to hybrid working and work from home environment. Businesses and retail consumers have bought laptops, computers, tablets, high-end phones to support and other peripherals to support their activities related to work and education.

The industry is expected to grow at 8-9% CAGR over the medium term, reaching Rs 5,450 -5,700 billion by fiscal 2028 driven by digitisation trends across facets of consumer lifestyle.

ORIENT TECHNOLOGIES LIMITED STRENGTHS
1. Marquee customer base across diverse Customer Industries
2. Wide ranging and diversified IT solutions and offerings
3. Strong Promoters and Board of Directors supported by an experienced senior management team
4. Track record of financial performance

ORIENT TECHNOLOGIES LIMITED STRATEGIES
1. Expanding and augmenting their product and services portfolio
2. Expanding their geographic footprint
3. Investing in the growth of their employees

ORIENT TECHNOLOGIES LIMITED RISK FACTORS & CONCERNS
1. They are heavily reliant on their top 10 customers, and the loss of such customers.
2. They depend on few Customer Industries for majority of their revenue from operations.
3. A significant proportion of their orders are from government related entities which award the contract through a process of tender.
4. Device-as-a-Service (DaaS) market in India is at a very nascent stage and fragmented currently and they cannot assure us that their new venture into DaaS market will enable them to increase their overall revenue from operations.
5. A portion of their revenues and their expenses are denominated in foreign currency.