Moving On Up
This article originally appeared in Outsource Magazine Issue #24 Summer 2011
PR Chandrasekar is the CEO of Hexaware Technologies, a global provider of IT and process outsourcing services. With a growing global footprint and a blossoming reputation within its focus areas, these are exciting times for Hexaware – but it’s no time to rest on the organisation’s laurels, says the man in charge…
outsource: Let’s kick off with some background: can you tell us a little about Hexaware and the organisation’s evolution?
PR Chandrasekar: We’re about 20 years old – in fact, we just celebrated our 20th anniversary. We are one of the top 20 IT services companies in India and we have about 6,600 employees spread over almost 32 countries. The primary market we service is North America, which is about 67 per cent of our revenues; Europe is our next big chunk – about 28 per cent give or take, depending on the quarter – and the rest is APAC: Australia, Japan and recently we have started doing some business in India as well. We are fairly focused in terms of the areas in which we operate and for a company of our size – maybe because of our size – we are quite innovative in terms of the solutions and ideas we present to our clients.
Like most global sourcing companies there is a mix of onsite and offshore in anything that we do. Actually our onsite component tends to be a little bit higher compared with other companies in our sector – so if we are involved in enterprise solutions like a large PeopleSoft project or a business intelligence/analytics engagement we tend to be little more onsite-centric than other companies. Geographically, our biggest presences would be India, North America, the UK, Germany, and the Netherlands. A few years ago we set up a presence in Mexico for both acquiring customers and importantly, acquiring talent; we have set up a small operation in Ostrava in the Czech Republic; and we will set up something in China too.
In terms of growth geographies, many of the customers we deal with – once they make that emotional leap to, first, outsource, and after outsource to offshore – the next question is: “Where do I get the best people and where do I get the cheapest price?” Until then there is a feeling that “I want to touch them, feel them, look at them” – but once they move past that, the reality is that places like India do produce good talent, cost-wise it is still competitive and – particularly in project management and where scale matters – it is still a tough value proposition to beat.
o: How important is labour arbitrage now for organisations coming to deal with you – is it still a crucial part of your outsourcing strategy?
PRC: I think people are looking for much more than what they did few years ago. There are a number of things within that. Cost of course remains an important decision factor, particularly given the environment. The financial and economic crises that followed across the globe accentuated matters for various reasons. Many larger companies shed people; now the demand has come back or the need to do projects which they previously ignored, they want to outsource again at a competitive price.
I think the crises moved the bar on what people will pay for certain things. I will not say permanently: but it will be difficult to charge $1,000 per hour for a period of time! In parallel most of the larger global firms have moved up the value chain quite significantly. If you go to India and see the work they do now versus two years back – forget five years back – it is pretty amazing. Every single quarter you end up doing more sophisticated work, larger projects, more domain-oriented work, and even the kind of work you used to do offshore versus onsite has changed. And that is partly because the Indian companies are moving up the value chain. In parallel, clients are pushing: “Give me more; I want you to do more.”
Also, there is no longer the definition that used to exist about TCS, Infosys, Wipro being large Indian outsourcing firms, and IBM, Accenture, XYZ being large onsite firms. This line is becoming blurred. Accenture has 50,000+ people in India. IBM has 100,000+ people in India, and that is just as big as a large Indian IT firm. The truth is they are adding even more as a percentage compared to other parts of the world. This further validates the fact that high-quality outsourcing can be done there – and I think it puts further pressure on companies like us to do what they do onsite so that we can compete. They can come and say “I can do everything they do plus more” – so companies like us have to go and ensure there are things they cannot do, even on their home turf.
o: You said at the beginning that one of your USPs is the level of innovation…
PRC: We can’t compete on scale. So from the start we’ve said, we need to be focused. Particularly in the last three or four years we have determined to focus on two verticals: financial services, and travel and transportation. And even within these two verticals, we will pick sub-verticals, where we are building more capabilities so that at least in those verticals we fully understand the domain, its various platforms, its various products and applications, and in that particular area, we have as many people, or more, who have done as sophisticated work as the bigger guys.
o: The main theme of this issue of Outsource is the cloud: what does cloud mean for Hexaware?
PRC: For anyone in the IT industry for the last year plus, it’s been hard to ignore the buzz around cloud. It is both an opportunity and a potentially radical transformation. At least based on our experience and the customers we serve has it yet really materially changed the way IT services are done today or how customers actually do their work? Not really. Has the number of conversations continued to increase? Yes. The cloud is primarily a means to use either software or a platform or expertise and spread it across multiple users, locations, and areas – and by doing that cut costs in a whole variety of ways and provide far greater access.
Here is an opportunity for us to create certain services and build expertise. For starters we have our own private cloud in Hexaware called Rainmaker that we’ve built. Many of our applications are on the cloud: it serves two purposes. We are learning more about it, we are training people about it, building certain tool sets and capabilities around it – and we’ve hired people who are considered experts in this area.
o: What are your major challenges over the next couple of years?
PRC: One is the environment: clearly, it helps when the mood is good, and demand is good. But it is still obvious that economic recovery is a mixed bag so we’re hoping that nothing suddenly happens for example with Greece or that the Middle East takes a tumble again. This is one part of the equation. The second challenge is to remain focused: it’s important to be firm that “this is where I am and this is what I’m going to do”. The third challenge for companies like us, with a lot of talent based in India, is availability of good talent and most importantly the ability to retain that talent. In a world where – particularly in the UK – you read about unemployment every day, it may seem odd but it is a hot market in India. Costs are rising and expectations are rising, so just managing people and talent is a pretty big challenge.
o: And what’s your secret to the perfect outsourcing relationship?
PRC: I can answer that with a typical cliché: trust, and the willingness actually to partner. You can pay lip service to the concept of partnering, but if you are willing to take it to the next level we are willing to go there for you. I will hire people, and even keep them on the bench if that is what you want. But in return, you give me a seat on your forward-looking table. Tell me what over the next few years are the projects you are going to be doing and then I can prepare to help you achieve your greatest ambitions.