CDC to acquire more product, services companies

CDC Software plans to acquire services companies to boost its outsourced services delivery capability, as its services business grows.

“The issue that we have today is that we have more demand than we have resources for services delivery,” said Eric Musser, president of CDC Software in an interview Wednesday.

A wholly-owned subsidiary of CDC Corp. of Hong Kong, CDC Software plans to make acquisitions in India in the next six months, with acquisitions planned down the line also in North America, China, and Europe as well, Musser said.

The company said Tuesday it expects to make a little over $300 million in revenue this year, and has projected revenue of over $400 million for next year. About 80 percent of this revenue comes from CDC Software, which provides software and implementation services, as well as ongoing services to customers, both around its own enterprise products and third-party products.

Services account for about 50 percent of the revenue of CDC Software currently, of which about 20 percent is around third-party products. CDC Software has about 700 services staff worldwide, spread across North America, Europe, China, India, and Australia. CDC Software may start moving to India more of its services delivery for developed regions, Musser said.

CDC Software already has a development and services center in Bangalore, where it employs 150 staff doing development, and another 150 on outsourced business services. It plans to double staff at this center within one year, Musser said. The services staff in India will likely account for 30 to 40 percent of services staff worldwide by the end of next year.

The company will acquire product companies as well in Europe, India, China, and North America, Musser said. It is looking to acquire companies that will provide access to new customers, or have products that fit into its focus on vertical markets, he added.

CDC Software has been on an acquisition spree, and expects to do one or two acquisitions per quarter, Musser said. In October it acquired MVI Technology, a U.K. vendor of real-time performance management (RPM) software and services for the food and beverage, pharmaceuticals and chemicals industries. In September, it announced the acquisition of Brilliant Training and Consulting in Australia. It also acquired in April this year c360 Solutions Inc., a provider of CRM (customer relationship management) add-on products, industry-specific CRM solutions and CRM development tools for Microsoft Dynamics CRM.

CDC joined earlier this year with Microsoft to deliver various applications in China using the software-as-a-service model, including the Chinese edition of Microsoft Dynamics CRM 3.0. Microsoft’s applications are horizontal and don’t compete with CDC Software’s products, which are targeted at a few vertical markets, Musser said. Its CRM application for example gets most of its business from the financial services segment, while its ERP (enterprise resource planning) and SCM (supply chain management) products are targeted primarily at food companies, chemical, and biotechnology companies in the manufacturing sector, he added.