Chennai: Software services company Zylog Systems Limited is likely to dial voice over internet protocol (VoIP) services partnering with an American company already in this field.

"We will be a service provider targeting the retail segment as the existing players are catering to the enterprise segment," says Sudarshan Venkatraman, chairman and chief executive officer.

Zylog Systems plans an investment of around $3.5 million for the proposed venture, which would be through a 49:51 joint venture.

"Already we market some software products and hence marketing is not new. Moreover we understand the Internet telephony technology," Venkatraman adds.
He does not expect serious threat from the telecom service providers as it is the small companies that would start new services and create the market.

Zylog Systems would target the mobile phone segment as the handsets would soon become VpIP enabled.

Internet telephony aside, Zylog Systems is expanding its core business viz, software services and solutions for banking, financial services and insurance (BFSI), telecom, retail, pharma, manufacturing and others.

The company is focusing on the Asia Pacific region for banking clients and Europe for telecom and insurance customers.

Says S P Srihari, finance controller, "65 per cent of our revenue is from software services and the balance from selling solutions."

Speaking about the geographical spread of the revenue he says, 98 per cent of the Rs.4.04 billion is from North America and the balance two per cent is shared between Europe and Asia Pacific.

In two years the revenue from Europe and Asia Pacific regions is expected to go up to 5 per cent.

"The rupee appreciation against the US dollar affected our income only to the extent of 5 per cent," remarks Srihari.

Zylog Systems was able to get an upward revision in its billing rates from its clients following the dollar depreciation.

According to him the company is adopting a wait and watch approach on its plans to build a development centre at Siruseri near Chennai.

"The decision depends on the government's decision to extend the Software Technology Park of India (STPI) tax sops. It the STPI scheme is not extended then we would build the new centre in a special economic zone," he says.