Playbook Partners has taken the lead in an $11 million funding round for KaarTech, a specialist in enterprise technology services, underscoring investor confidence in India’s rapidly expanding business-process digitisation market. The capital injection raises KaarTech’s valuation to approximately Rs 2,000 crore and will be deployed to deepen the firm’s product engineering capabilities, broaden its North American and European client roster, and accelerate acquisitions that extend its intellectual-property portfolio, executives told The Economic Times.
With the transaction, Playbook joins existing backer A91 Partners—which controls roughly 30 per cent of the company after a $30 million investment last year—as well as family offices and high-net-worth individuals who have participated in earlier rounds. KaarTech, founded in 2006 and headquartered in Chennai, focuses on SAP implementations, cloud migrations, data analytics and process automation for Fortune 1000 clients across manufacturing, retail, life-sciences and financial services.
“Enterprise software spending is rebounding faster than anticipated, and mid-market customers are demanding faster time-to-value,” said KaarTech chief executive Maran Nallusamy in a video interview. “The new capital allows us to double our R&D headcount, build vertical-specific accelerators and strengthen our near-shore delivery hubs in Mexico and Eastern Europe.”
Playbook Partners, a Singapore-based investment firm set up by former TPG and McKinsey executives, targets growth-stage companies with annual recurring revenue between $20 million and $200 million. KaarTech, whose top line grew 35 per cent to $140 million in the fiscal year ended March 2024, fits squarely within that mandate. “We were attracted by KaarTech’s sticky client relationships, 28 per cent EBITDA margins and a proven ability to cross-sell proprietary products,” Playbook managing director Rohit Bhayana said. “The company is at an inflection point where targeted capital can unlock disproportionate value.”
The global market for SAP services is projected to reach $66 billion by 2027, according to research firm Gartner, as organisations modernise legacy ERP suites and migrate workloads to hyperscale clouds such as Amazon Web Services, Microsoft Azure and Google Cloud. KaarTech competes with larger Indian rivals such as Accenture India, Tata Consultancy Services and Infosys, but differentiates itself by pre-configuring industry templates that shorten deployment cycles by up to 40 per cent, Nallusamy claimed.
One of the firm’s flagship offerings, KT.Digital, is a low-code platform that automates procure-to-pay, order-to-cash and record-to-report processes. The product has been adopted by more than 60 customers since its commercial launch in 2022 and contributes roughly 15 per cent of overall revenue. KaarTech plans to use part of the new funds to build similar products for supply-chain risk management and environmental, social and governance (ESG) reporting, two areas where CFOs are increasing spend amid regulatory pressure in the United States and European Union.
“Indian IT services firms historically relied on labour arbitrage; the next decade will belong to firms that can productise domain expertise,” said Siddharth Pai, founder of research advisory Squer and a former partner at Infosys Consulting. “KaarTech’s vertical focus and IP-led model position it well for the current macro climate where clients demand outcome-based pricing.”
KaarTech’s client roster includes more than 250 enterprises, among them a top-three global confectionery manufacturer, a Fortune 50 retailer and several mid-cap private-equity portfolio companies. The firm maintains 18 offices across the United States, Germany, United Kingdom, Singapore and India, and employs 3,200 people. Management expects headcount to surpass 4,000 within 18 months as it ramps up hiring in Mexico and Poland to service time-zone-critical projects.
The company is also exploring acquisitions in the $5 million-to-$15 million revenue range that can add complementary capabilities in robotic process automation, customer experience analytics or SAP S/4Hanna extensions. “We are in late-stage discussions with two targets—one in North America and another in the Nordics,” chief financial officer Ramesh Krishnan said, declining to disclose names because of confidentiality agreements.
For Playbook Partners, the KaarTech deal marks the second investment from its $250 million maiden fund closed in 2023. The firm earlier backed Indian SaaS provider Zoko Labs, and is evaluating four additional transactions in enterprise software and fintech. Bhayana said Playbook typically writes cheques of $10 million to $40 million and prefers minority stakes where founders retain strategic control.
“We see a unique window where mid-cap enterprise-tech firms can capture share from incumbents that are distracted by macro headwinds,” he added. “KaarTech’s track record of profitable growth and nimble execution gives us confidence that it can scale to $500 million revenue within five years.”
Industry watchers note that India’s IT services sector is undergoing a structural shift as clients move from fixed-bid projects to subscription and success-fee models. A McKinsey & Company report estimates that Indian firms could unlock $200 billion in additional market cap by 2030 if they pivot to product-and-platform revenue streams.
KaarTech’s leadership team, which includes co-founders Nallusamy and Krishnan as well as chief operating officer Anand Paramasivam, collectively owns about 35 per cent of the company after the latest round. The firm is considering an initial public offering within the next three years, potentially joining a cohort of recently listed enterprise-tech providers such as Zensar Technologies and Coforge that have outperformed broader indices.
Until then, the immediate priority is to deepen customer relationships and expand wallet share, Nallusamy said. “We have barely scratched the surface of our existing accounts. With Playbook’s backing we can invest ahead of the curve and emerge as the go-to transformation partner for SAP-centric enterprises.”
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