SumTotal to spend $3 million on Hyderabad centre

CIRCUIT EC / Hyderabad

SUMTOTAL Systems, the newly-formed merged entity of Docent Inc. and Click2learn, has earmarked about $3 million to make its Hyderabad development centre the hub of its global operations in areas like services, products and R&D. Officials announced the completion of the merger between the companies, and following this, SumTotal will have a savings of $15 million every year with a combined turnover of $60 million. It is planning to add another 30 professionals to the Hyderabad centre.

The Nasdaq-listed company is expecting to register a $67 million turnover for the current fiscal with a positive cash flow from the second quarter. At the time of the merger, each company had projects worth over $10 million on hand, so the merged entity is likely to become a prominent player in the learning management software industry.

“Six months ago, 70 percent of engineering services work was being done here, and now the contribution of the Hyderabad centre has increased to 100 percent in terms of project assignment and project management. At the same time, the quality assurance work done in India went up from 50 percent to 75 percent. During the past six months we ramped up our headcount to 130 from the level of 90, and it will be around 160 shortly,” disclosed Sitaram Raju, managing director.

“The company has about $40 million of cash reserves in hand because of the merger, and we have earmarked $3 million to be spent over the next 12 months on the Hyderabad centre,” said Sudheer Koneru, senior vice president, International Operations. (The headcount at Global Operations came down to 400 from 470 because of the increased focus on the Hyderabad development centre.)

SumTotal is likely to announce first quarter results in the first week of April 2004, and by that time it expects to give guidance for the second quarter.

At a special stockholder meeting held on March 18, 2004, the stockholders of Click2learn and Docent approved the merger. With this, the stockholders of Click2learn and Docent will hold approximately 52 percent and 48 percent in the total stock of SumTotal Systems.