Blackstone-backed IBS Software expects faster biz growth on rising digitalisation amid pandemic

Global PE fund Blackstone-backed IBS Software expects a faster growth in its business on the back of increasing digitalisation in aviation, tourism and hospitality sectors amid the coronavirus pandemic, its founder and Executive Chairman V K Mathews said.

Global PE fund Blackstone-backed IBS Software expects a faster growth in its business on the back of increasing digitalisation in aviation, tourism and hospitality sectors amid the coronavirus pandemic, its founder and Executive Chairman V K Mathews said. A provider of SaaS (software-as-a-service) solutions to aviation, tourism and hospitality sectors, IBS Software caters to around 200 clients across 25 countries, including the US, the UK, Dubai, Singapore, China and Japan.

The clients include Emirates, Etihad Airways, Qatar Airways, Korean Air and British Airways. It has also provided its flight operations and crew management service to the erstwhile Kingfisher Airlines and now-defunct Jet Airways in India. The company offers three solutions in the airline sector, one each for passenger reservation system, flight operations and cargo operations, besides one product for travel and another for the logistics sector.

''We have been growing at roughly around 20 per cent year-on-year in the past three years. We expect to grow faster going forward,'' Mathews told PTI in an interaction. He said COVID-19 will accelerate growth as the companies are expected to invest more in technology in the wake of digital transformation.

''One of the major things the airlines globally are doing is that they are trying to replace all the legacy systems with modern and state-of the-art enterprise software,'' Mathews said. Currently, the aviation sector accounts for 60 per cent in the total revenue of IBS Software, followed by tourism and hospitality with 30-35 per cent, he said.

The oil and gas sector accounts for the remaining nearly five per cent, according to Mathews. ''We expect all the sectors to contribute in the growth,'' Mathews said.

Noting that the global aviation industry is around USD 800 billion in size and is a big ''target sector'', he said airlines on an average spend about 3 per cent of their total revenue currently with some leading airlines spending more, at around 3.5 per cent to 5 per cent. ''Going forward, airlines globally are expected to invest about 5 per cent of their total revenue in acquring and new technology,'' he said.

Though Mathew said that globally, there is an acceleration in investment in technology by the airlines, the Indian carriers are ''lagging'' in such investments because of their ''high'' operatings cost. ''The domestic aviation sector has great potential for growth but it is also a difficult market. It is difficult for the airlines to sustain because of the high costs and low fares,'' he said.

Mathews added that airlines in India are unable to take a strategic view on tecnology investment because of the high operating cost only. ''But, lesser investment on technology does not necessarily indicate the (financial) health of an airline.'' He said that owing to the pandemic, the aviation industry is expected to shrink 60 per cent in 2020 but it will reach 70 per cent of the pre-COVID-19 level in 2021. The industry is likely to be recovered by 2024, he said.