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Anil Ambani’s move into IT fraught with uncertainties

Tech Reliance will soon take on software giants like Infosys amidst shadows of doubt over what a strong rupee and rising wages means for this export-oriented industry, reports Archana Khatri.

india Updated: Jan 03, 2008 00:42 IST
Archana Khatri
Archana Khatri
Hindustan Times

Risk seems to be Anil Ambani’s new middle name. Not content to fight a pitched regulatory battle for spectrum in GSM telephony and another one with intimate adversaries who criticized the forthcoming IPO of his Reliance Power, he has decided to take another difficult frontier.

The announcement this week that Tech Reliance, a newborn company would take on software giants like Infosys, comes even as there are shadows of doubt over what a strong rupee and rising wages means for this export-oriented industry. “Its an interesting move that has turned heads in the industry circles. We have to watch what’s the move and what’s the strategy,” says Kaustabh Dhavase of industry analyst Frost&Sullivan.

Anil’s Reliance ADA Group plans to enter the $100 billion Information Technology(IT) space with an initial investment of $2 billion.

The company to be called Tech Reliance will offer IT solutions and services across domains. Details are set to be formally announced in about two weeks time though indications are that the ADAG group’s in-house IT capabilities will be aggregated to form a core.

Its not just a tough move, but it’s an ambitious move for Anil Ambani, not only to make inroads into an already mature market, but even to aspire to take on bigwigs that include Tata Consultancy Services and Wipro head on.

But Tech Reliance wants to be counted among the top five in two years time, group sources said. ADAG companies have a strong IT departments to meet in-house requirements in companies functioning in sectors such as telecoms, financial services, utilities, entertainment and healthcare.

Group companies have about Rs 2,000 crore in IT spend, and 20-30 per cent of that would be offloaded to Tech Reliance.

But to grow beyond tapping the captive business, Tech Reliance will not only have to attract the right people, Anil Ambani will also have to find a synergy between the culture of a new age IT company and its legacy companies.

“It would be foolhardy to think that he will compete easily. It may seem easy at the starting point, but going forward will not be easy,” Dhavase said.