Outsourcing: Sanjay Dhawan, CEO of Symphony Services (Part 7)

Sraman Mitra: The point I’m trying to make is that there is a filter, and you’re making these bets with a lens in mind. Your end goal is to use these companies to get into larger companies that will acquire them. What I’m talking about is a scale of one million entrepreneurs reaching $1 million in revenues. Many of these companies will never get acquired. These are going to be cash businesses. These are little businesses that will be maybe $2 million, $5 million businesses and they will remain that. Nobody will ever acquire them.

There is a very large number of companies in that category: e-commerce companies, small software companies, outsourcing companies, mobile applications, games. Lots of gaming companies two-member or four-member teams developing games. There are lots of companies like these that also have OPD needs. And what I’m saying is there is – I know this because I deal with these companies day in and day out – these companies have software development needs. That is a space where there’s opportunity to build companies.

Sanjay Dhawan: Right. I hope you understand applying the filter from our standpoint.

SM: I think it makes perfect sense. If I were running your company, I would do the same. By the way, the story I was telling you about Silicon Valley Bank also makes perfect sense. Silicon Valley Bank has no ability to appraise the risk of these startups. What they do is they use the VCs as their due diligence mechanisms. They invest alongside VCs. If the VCs put in equity, they put in debt.

SD: Right. Correct.

SM: They would not offer that same kind of credit to companies that do not have any other equity financing, preferably venture equity financing. So, I was telling them that there are lots of companies out there that don’t fit the venture equity model. You’re leaving out all of those companies. And they said, yes, you’re absolutely right, but we have no way of appraising that risk.

SD: Right. I understand. In our case, no, we don’t use VCs as a mechanism to provide that filter. We do our own diligence, based on where we see the trends, what we are hearing from our other customers and what direction we want to go in. We, for example, see a company that is not VC funded, yet, in the healthcare space, that we’re engaging with. We’re meeting with them, and we hope there will be a relationship between our company and theirs. But that’s all based on, again, our desire to grow more in the healthcare space.

SM: Absolutely. Is there anything else you want to discuss or add to what we’ve covered so far?

SD: No, I think we have covered most of the points. To sum up, from our standpoint, the software that we are seeing is quite unprecedented in terms of the change that the industry will go through in the next 10 years. We feel fortunate to be part of it. That gives us growth opportunities for our employees to participate in this sea of change that’s happening, and also create value for our shareholders.

SM: Great. Thank you, Sanjay.

SD: Great initiative. Thank you so much.

This segment is part 7 in the series : Outsourcing: Sanjay Dhawan, CEO of Symphony Services
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