Outsourcing: LN Balaji, President of ITC Infotech (Part 3)

Sramana Mitra: Talk about what trends you’re seeing in your client base. Obviously, the outsourcing industry is going through lots of shifts: geographically, cost structure, competition for talent, geopolitical risk, currency risk, and so on. If you can synthesize the few dominant trends you’re seeing and that your clients are worrying about, what would those be?

LN Balaji: Honestly, cost doesn’t come at the top. Almost invariably, our clients are looking at value. I’ll expand on this in a bit. There are certain areas no client will compromise on irrespective of whether he’s in the midst of a recession. Some of those areas would be around the client. There are enough studies that will tell you if you segment it and brick-wall your existing customers carefully, they would yield far greater revenues than it would take for you to go out and get real customers. Typically, it takes anywhere from six to twelve times the cost to acquire a new customer as it does to mine an existing customer. What can companies do to add value to their customers? How can they set themselves up to serve that purpose? How can they segment their customers carefully? How can they add services but partnering with others who are looking to do the same thing. That’s the kind of stuff that companies would do because that is core to their very existence and core to their competitiveness.

Another area is product development. You may cut down on many things, but if you tamper with your product development process, then the company’s compromising its future. These are some of the areas where I have seen, at ITC Infotech, demand even in the peak of the recession. In fact, over the past two years, we’ve added more clients than in all of our previous eight years put together.

SM: This is because of your focus on the product life cycle model?

LNB: I’ll give you two examples. Because of these specific focus areas, another area would be business intelligence and analytics. This is not just something for two. This is sitting on top of a data warehouse, but contextualized BI, which means what do I need to do to make my supply chain more efficient?  These are typically requirements of a CXO, and how does that cascade down through to their supply chain partners, both incoming and outgoing? How can you have nested KPI (key performance indicator) so that at every level, they would be exposed to only certain relevant metrics, which in turn roll out to the four or five or six metrics the top management view as critical to their existence? Specific things that require some amount of consultative and collaborative service definitions, and then the rendition of the service itself.

Another area that’s growing is infrastructure services. That area is growing really well. We are strong on the end user computing side and on the server network monitoring side. Many of these can be done successfully offshore, thereby bringing in a tremendous amount of cost savings. This is the one area where I suppose cost would be a predominant driver because people do not want to lock up resources in monitoring how long a server is up, how long an application is up, and so on. Windows 7, we have a proprietary methodology working in tandem with the methodologies prescribed by Microsoft where we can do an end-to-end diagnostic remediation and deployment about 20% faster and 25% cheaper than most people.

SM: You’ve covered a lot of different things, but just to close out the discussion on ITC specifically, you are about a $75 million company?

LNB: No, $200 million.

SM: $200 million, So, obviously, you are looking at how to go from $200 million to $500 million.

LNB: Yes.

SM: Can you summarize what the growth plan is going to be? What are some of the big levers that you can push to grow to $500 million?

LNB: We’ve got five specific levers from a service line point of view where a lot of our investment capability, building, and all that is going, which is bringing in more than two-thirds of our growth. They are product life cycle management, loyalty, ERP within that, SAP and within that, specifically, some of the newer things around business objects, BI, HANA, those technologies. The fourth is capital markets quality assurance where we have deep, specialized capability where we built upon an acquisition that we made about two years ago. The last is infrastructure, in particular, Windows 7, SharePoint, and going forward, Azure, which is the cloud offering of Microsoft. These five areas are the first bullet point. These are incredible growth drivers for us.

The second bullet point is we are expanding regions around clients. Some clients want us to deliver services to them in Mexico, and we are doing that. I mentioned South Africa. We deliver services in Singapore and in Australia. The geographic expansion is the second one.

The third is we’re looking to grow not only organically but also inorganically, which means through acquisitions. But there I have to be a little bit careful because the acquisition has to fit in with our strategic focus areas, which are the five industry verticals. We should end up buying deep capability that will supplement what we do not have and not just buy something for the sake of scale.

This segment is part 3 in the series : Outsourcing: LN Balaji, President of ITC Infotech
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