Omesti seeks to widen recurring income stream

KUALA LUMPUR: Loss-making IT services provider Omesti Bhd aims to build more businesses with recurring revenue, such as software solutions-as-a-service, to help cushion any volatility in the group’s earnings.
Omesti’s businesses include distribution and maintenance of computer equipment and software, development of application software and system integration, network, information, as well as system integration services.
The group serves a wide range of customers including government-linked and public sector companies, telcos and the financial services industry.
Currently, about 15% of the group’s total revenue comes from recurring sources, while the rest of the income is from one-off contracts.
Recently the group clinched a key contract worth RM17 million from the Companies Commission of Malaysia to develop a system which will enable companies file annual returns and audited accounts electronically.
“We are planning to move (away) from the lumpy contractual style of business,” its executive director Monteiro Gerard Clair told SunBiz in an interview recently.
‘The focus will remain on shifting the group’s traditional business from a ‘feast or famine’ scenario – when there is a high level of project activity earnings are strong, and the opposite when not – to a recurring revenue and business process outsourcing model,” he added.
Gerard noted that the group’s diversification into several new business initiatives over the past few years has helped to narrow its losses.
In its latest financial result ended Sept 30, 2016 (Q2FY17), the group’s net loss for the six-month period was reduced to RM9.3 million, compared with RM12.4 million in the same period last year.
On the group’s prospects and outlook for the technology industry, Gerard said he expects the market will remain tough this year, as ringgit continues to depreciate. “It is going to be tough with the ringgit going as it is… everyone is going to feel the pinch.
“The public sector is likely to tighten, but there are many initiatives for the ICT sector as outlined in Budget 2016,” he added, noting more than 50% of the group’s projects derived from the public sector.
However, looking on the bright side, Gerard noted that every organisation will be looking to work smarter, minimising their capital expenditure and optimising resources. “Omesti can provide the solutions for them to achieve this,” he said.
As at Sept 30, 2016, Gerard said, the group’s order book was in excess of RM265 million, of which the tender book averages about four times that of backlog.
Moving into 2017, Gerard said, the group will continue to build new business initiatives in the areas of big data infrastructure, cloud and data analytics, where it is able to help clients optimise their data.
He said a number of the group’s new business initiatives will come into play, including its technology partnership with Microimage HCM Asia, to enable companies to access the latest technology for smart human capital management, via mobile access, which will be available on a subscription pay-per-employee basis.
Gerard said the group will also be working on a cloud-based analytics platform called VIDA Intelligent Video Analytics to help companies capture critical data optimise resources from sales, marketing, talent management and security perspectives. The platform can be applied in large-scale retail operations, as well as individual retailers, public spaces, transport hubs and many more.
In terms of the payment space, Gerard said the group is working on the Virtual Prepaid Visa Card solution to provide access to cash via mobile phone for unbanked and underbanked people, based on core technology from its partner, Bancore AS.
“In Vietnam, the application known as SmartCash currently has over 750,000 registered users. The same technology will be deployed elsewhere in Asia in months to come.We are also looking into e-wallet activities. We are already active in the prepaid virtual debit card through our Virtual Visa Card partnership,” he added.