While the darlings of India's software sector were nursing a crash in their shares last month amid signs of slowing growth, one company was congratulating itself on taking a different turn more than a decade ago.

Banking automation software maker i-flex solutions ltd, which focuses on offering off-the-shelf products rather than services billed by the hour, has survived a bloodbath that saw about 25 per cent of the sector's value wiped out in two days.

The firm, 42 per cent owned by Citigroup Inc's investment arm, helps banks cut costs in managing deposits and credit. It is due to announce its full-year results on May 14, and analysts are expecting a rise in profits of at least 50 per cent.

i-flex is now betting on a new business intelligence product that helps companies generate scenarios from a plethora of data, its US-based chairman, Rajesh Hukku, told Reuters.

"There is a big target market, growth market in terms of business intelligence. There is no established player," Hukku said.

The product, called Reveleus, is designed to be easy to use  "like a Nintendo game" and has the potential for use in any industry, Hukku said.

Designing new products takes time and money and is a riskier business than billed services, which yield early profits. But products generate higher revenues at lower costs over a longer period.

"When we created i-flex 11 years ago, we had on day one said scalability of services will have problems," Hukku said.

Pricing pressures

Investors may be reaching a similar conclusion.

Shares in service-based Indian software companies including Infosys Technologies Ltd and Wipro Ltd crashed last month after they revealed pricing pressures.

That was bad news in an industry that depends heavily on demand from the US market, where an economic recovery is tepid at best, and a competitive advantage based on low wages.

While Infosys's shares are down about 28 per cent since the day before it announced results on April 10, i-flex has lost just 4.5 per cent. The year-to-date performance looks even better, with i-flex down 3.5 per cent versus 38.5 per cent for Infosys. And at a price of Rs 857.80 on Tuesday afternoon, i-flex is up 60 per cent from its flotation price last June.

"Fortunately, our stock has not crashed," Hukku said.

i-flex's net profit for the third quarter ended December rose 51 per cent from a year earlier to Rs 530 million ($11.2 million), while revenue rose 33 per cent to Rs 150 crore (Rs 1.5 billion).

Analysts expect a full-year net profit of Rs 194 crore (Rs 1.94 billion), according to Reuters Research, up from Rs 127 crore (Rs 1.27 billion) last year. Its shares are trading on a price/earnings ratio of about 16.5 based on full-year forecasts, against about 21 for Infosys, based on its results for the year to March 31.

Now 2,200 employees strong, i-flex was founded by former Citigroup employees. Its main product, FLEXCUBE, competes with software from firms like Switzerland's Temenos and Britain's Misys Plc. Citibank is a global customer for the product, which is used in places as remote as Samoa and Iceland.

Hukku said i-flex's early focus on the financial sector, getting intellectual property and having a global presence helped it stand out from services firms facing intense competition.

i-flex, which gets about 35 per cent of its revenue from services linked to the financial sector, is now ramping up Reveleus, whose customers already include the International Monetary Fund and the American Stock Exchange.