Q&A: Sushma Rajagopalan, ITC Infotech
Sushma Rajagopalan is the CEO of Bangalore-headquartered IT services company ITC Infotech, having been in her position since November last year. We got together with Sushma to get her thoughts on the business she’s taken on, today’s outsourcing landscape, and how changing buyer behaviour is driving deep changes in service provision…
Outsource: Sushma, our readers will obviously be aware of the company you now lead, but may be less so of yourself personally – so can you give us a bit of background on yourself to begin with?
Sushma Rajagopalan: Yes, I’ll be happy to do that. I have about twenty-five years of experience which traverses a vast cross section of the technology industry. I’ve spent that last twenty-four odd years in the United States, and have held global positions for well over the last fifteen years or so
My initial foray into the field of technology, particularly software, was through CMC, and I’ve had the rare opportunity of witnessing first-hand the entire evolution of the software services industry. I call myself a “student of the industry”, more than anything else.
I had a very interesting stint with Citibank in India, when Citibank was at its prime, and then I left for the United States. I got into a business management role with iMastech (now iGate) and their federal government division – and have never looked back since.
I went on to do multiple things, the last of which with iGate was to grow their infrastructure services business – back in those days it was called network services – which I successfully sold to Red Hat. I then sought an entrepreneurial path and went back to my alma mater, Carnegie Mellon. Thereafter, I took over as the CEO of a company that had a software package to teach people how to speak English. Later, I went on to co-found an outsource advisory firm to help clients outsource in the United States, while helping IT services companies grow inorganically.
This combined experience of outsourcing, mergers and acquisitions, and strategy provided me with great opportunities. Erstwhile clients started showing keen interest in appointing me as their Chief Strategy Officer. I worked with Zensar, where I was the CEO of one of their subsidiary companies, and then Larsen and Toubro, where I was the Chief Strategy Officer.
Prior to joining ITC Infotech, I was with LiquidHub, which is a digital integrator. It is a company in my backyard in Philadelphia – I had known the company since their inception. My mandate was to make LiquidHub a global company, growing their India delivery, which I did successfully and helped bring in a significant amount of funding.
And then I got a call from a head-hunter saying that ITC Infotech was looking for a global CEO. Now, there are a couple of reasons why this offer appealed to me.
First and foremost, it has to do with my conviction that as the IT industry transforms, mid-tier companies have a very interesting role to play in the transformation of the industry. And I could see very clearly that ITC Infotech actually has the ability to give credence to this theory. This was one of the biggest motivators.
The second was that this opportunity was absolutely a culmination of everything that I had done – an opportunity to lead an organisation into a hyper-growth mode & make ITC Infotech a very substantive part of ITC Ltd (the group company, which is an $8 billion diversified conglomerate, with a market cap of about $45 billion) and the ability to unlock the true potential of ITC Infotech from a quarter-billion dollar to several billions – to make it relevant.
The key was that while a lot of companies were touting that they were digital, I found that ITC Infotech was actually doing it – be it in customer experience, be it in data. This was a chance to bring out the brand, and build on the digital capabilities and data capabilities that ITC Infotech had.
It’s also worth adding that if I had stayed back in India, probably ITC Ltd would have been a company that I would have joined much earlier in life. Fundamentally, the people culture and heritage value of ITC Ltd is just fabulous, and it is the most admired company for a reason.
A long-winded answer, but hopefully sets the context for you!
O: There’s plenty to pick up from there! Firstly, when you talk about ITC Infotech achieving its potential, how do you define that potential?
SR: Let me answer that by the strategy that we are following: I call it a 4D strategy, from a three dimensionality to a four dimensionality; the four dimensions being domain, digital, data and differentiated delivery.
Increasingly, while it could be a very clichéd expression that “IT companies need to understand the business of their customers very well”, there are very few companies that truly do that. I’m not saying that we are the only one, but we probably, in the mid-tier category, do it better than most other people – particularly because this has been an inherent strength of our parent ITC Ltd – a diversified conglomerate operating market leading businesses in hotels, manufacturing, paper and paperboards, fast-moving consumer goods, and retail. This first-hand domain knowledge provides us with deep understanding of critical business areas such as product lifecycle management (PLM), retail, services business, manufacturing, and very large dispersed supply chains.
The second ‘D’ in our 4 D strategy is digital. The way I describe digital is that it is not just mobility, it’s not just customer experience: it’s a culmination of multiple things which enables an organisation to leverage its existing technology and technology infrastructure to be able to compete much more effectively in the market – in a market where disruptive technology is creating tectonic shifts.
The third ‘D’ is data. We want to convert data to insight much faster than anybody, thereby reducing time to market for our clients.
And finally, the fourth ‘D’: differentiated delivery. Here’s where I think the outsourcing industry is going to go. Most of the enterprise cloud clients are going to be looking for a continuum of services and service models. They would expect people to provide professional services, they would like companies that can do projects. And the same companies to be able to offer and deliver their services along multiple differentiated delivery models.
My strategy to propel ITC Infotech’s net wave of growth is a culmination of these 4 Ds – of course we need to be able to deliver on quality and we need to continue to enjoy the trusted partnership of our clients.
I am confident that this is something we at ITC Infotech can achieve. We will unlock the true potential of ITC Infotech, and soon be a significant multi-billion dollar player for ITC Ltd.
O: We talk about partnership a lot in outsourcing: do you feel that we are at a point where clients are willing and able to engage on a real partner level, in a way that they may not have been only a few years ago – and if so, why do you think that’s the case?
SR: I think the answer to this is not one-sided. To a large extent, the maturity of the outsourcing industry per se is a major contributing factor. The maturity of the enterprises and the business influence on IT: it isn’t just IT that is making some of these calls, but businesses are now looking for partners that can speak their language, that can understand their business. And the fact is that the market is becoming super-competitive: for every business model there is now an internet business model or an e-business model, which is further challenging companies. There’s a big shift.
I have been talking to multiple CIOs in the pharmaceutical industry. The pharmaceutical industry has historically been very profitable. They’ve never looked at IT from a huge business imperative standpoint. However, today, pharmaceutical companies want to understand their customers, no differently from how CPG companies know their customers. That’s a huge shift – and this shift is both a cause and an effect. With the availability of data and capabilities to gain actionable insights, companies can understand their customers much better – and hence, be more customer-centric.
Another example – I was talking to the Chief Digital Officer and Customer Experience Officer for one of the top three global banks the other day , and they’re interested in how to improve on net promoter score – and how to use technology as a way to do that.
We are seeing a great shift in the way businesses are talking about IT today. And this is further necessitating having partners for whom it is no longer just about cost arbitrage, but people who can understand their business, people who can take risks along with them, and people who will be with them as they continue to grow.
ITC Ltd, our parent organisation, is a hundred-year-old company. We, are committed to being a long-term sustainable technology partner for our clients. We are taking a long-haul perspective.
O: Do you see your company primarily having conversations with different people around deal-making now as a result of the changes you’ve just outlined? Where is the client sitting within the client organisation?
SR: Very interesting question. Now, please keep in mind that I have been with ITC Infotech only since August 2014, and I’ve taken over as the CEO on the 1st of November, 2014.
Within the first three weeks of my joining the organisation, I was on a global tour. We operate out of seventeen countries, and I got to meet some of our leading customers. Very interestingly, everybody – from a safety double glove manufacturer in the United States to a distributor of six thousand food supplements – wants to know how to crack the code on knowing their customers better. Clients are looking at ways to adopt digital technologies, they are assessing if they have the underlying IT infrastructure to be able to manage and bring out the relevancy in data, how well to use it, and how to improve customer experience.
The entire operational enablement is driven by taking existing systems and extracting more life out of it, while mobile enabling them. But while research reports talk about 40% of the IT spend being driven by marketing and business, I can tell you that more than 40% of our clients are talking about it.
I would definitely give a lot of credence to the fact there is a shift along the lines that I’ve just outlined. And, one of the first things we did at ITC Infotech was to set a digital agenda.
O: And that leads to a broader question really: what do you see as being the biggest challenges and obstacles that you face coming into this role, from an organisational perspective?
SR: Let me share some of the broader industry challenges, and then I will drill it down to the company level.
The challenge in this is that enterprises, while they know what they want, are still evolving, which makes this is an evolving paradigm, and this is almost like how the outsourcing industry began twenty or twenty-five years ago. There is nascence – and the challenges that evolve out of that nascence are that you have to be extraordinarily flexible, without compromising on what you want to do. Because it’s very easy to end up being everything to everybody.
The way we at ITC Infotech are dealing with this is by drawing out very clearly that we want to be leaders in select niche areas – we want to be leaders in customer experience, we want to be leaders in supply chain, we want to be leaders in data. We want to be leaders in product lifecycle management (PLM), CPG, retail, and the services industry. Services industry includes airlines, hotels and hospitality. We are also building a challengeable position for ourselves in banking and financial services, the rest of discrete manufacturing, operations enablement, and mobile development.
I think the challenge that all of us will face is an evolving paradigm around how data will be consumed; data is going to be running people’s businesses – how much is a client going to outsource, and how much would they want to supplement remains to be seen.
To some extent you also need to be flexible. An age-old question that people ask when outsourcing: “Should I do it myself, should I give it to somebody?”; “Should I give it to one person, should I give it to multi-vendors?” The industry went through this entire revolution of single source to multi-vendor to captive, to captives getting monitored and captives getting researched. You will see some of that, and we as a company need to be flexible.
The second challenge is that this will not just be an offshore-driven game anymore. And companies like ITC Infotech are actually ready for that challenge. In fact, one of the key things we want to do is to have multiple delivery centres. I am looking at two in Europe; it could be Lithuania, it could be Poland, it could be Prague. We are planning for at least two additional centres, we already have one set up in Norway. And super specialisation is going to lead the way. Like I mentioned earlier, I call this phenomenon differentiated delivery. A long-term perspective coupled with nimbleness will be our success mantra.
O: You mentioned earlier on that the competiveness is increasing in this space; I’m wondering whether or not you think there’s a danger of the outsourcing industry offering too much and trying to do too much for clients. Do you think there’s a case for saying that perhaps promises of future developments and future benefits are being made which might not be able to be matched by the actual performance?
SR: When I earlier alluded to increasing competitiveness, I was actually talking about the competitiveness increasing for all our enterprise clients, by this type of model. If you look at the IT landscape, I classify it into four groups.
You have the behemoths – and to some extent, the behemoths are actually paring down, trying to split and divide so that they can get nimbler.
Then you have the global players who are deciding if they want to be a product company or a services company. This group is also looking at balancing disproportionately high headcounts, while maintaining their growth trajectory.
Then you have the mid-tier firms like us, anywhere from hundred-million-and-above companies to about the billion-dollar mark. There aren’t that many quarter-of-a-billion dollar companies in this space, and they have only two ways to grow.
And then you have the final group, which comprises of the young disrupters: from start-ups to about fifty, sixty million dollars. These companies are definitely attractive. But their goal and orientation is to disrupt the market and monetise value. Most in this category are invariably private equity-backed companies.
From a mid-tier perspective, companies like ITC Infotech hardly compete with other mid-tier companies. We are competing with the larger global companies. And, when we compete with the bigger players, we need to be careful that we do not overcommit. Overcommitting and under-delivering is a cardinal sin.
O: OK, so from the perspective of a client, how can you tell if someone’s over-promising? We speak with a lot of buyers, or potential buyers, who find the landscape quite confusing to navigate, perhaps partly because the differentiation from one provider to another is not as great as it might be and therefore everyone seems to be promising to do the same stuff particularly well.
SR: Trying to navigate the landscape illustrates my example.
Let me go back to the banking company I spoke about earlier – it is one of the top five banks in the world. They are not new to outsourcing at all; they have practically written the book on outsourcing! They have a team that is specialising on data and analytics. The only reason they came to us is to say “Gee, we are not growing fast enough. Tell us, what do we need to do? What are the cross-industry practices? And tell us what you can do for us.” This is where IT companies need to don the role of a trusted advisor. Service providers should not shy away from providing a contrarian view.
Recently, one of my senior management team colleagues in Spain was talking to a very large manufacturer, and, we provided candid feedback to our client – “here are the three ways in which you can do things; we think this is the best one.” It may not have been the best thing for us as service providers, but we chose to gain the trust of our customer and create a long-term sustainable engagement.
I think it becomes extremely important for most mid-tier companies to have a very strong consultative approach, where we can lay out the various paths and the road-mapping for enterprise. Customers will have to make their choice based on the following: the attention they are likely to get, the gravitas that mid-tier providers has in solving their issues, and the depth of technology as well as business domain knowledge.
Everything else is left to softer issues in terms of culture and flexibility, especially given the nascence of the new paradigm and its evolving nature.
O: Geographically, where do you see the market changing, if at all? Do you still see the outsourcing heartland being the US, the UK, the bigger Western economies, or do you think that you’re moving into this position at a time when the potential buyer market is shifting in terms of its geographies of origin?
SR: The buyer for IT services is shifting from IT to business and marketing, and this is a worldwide phenomenon.
In terms of just sheer economic growth and consequently growth in IT from a location perspective – yes, the US will still be a leader. Additionally, I also think the top three markets in Europe will continue to grow – UK, Benelux and Nordics. If you look at the European market, we are very bullish on the Nordic region.
India and Asia-Pac are going to show a lot of aggressive growth from an IT perspective, especially in the banking and financial services sector. Japan is also a promising market – albeit, a difficult market to crack, but we are looking at Japan.
O: This is a really interesting time for everyone in this space, and certainly the options available for buyers have probably never been greater; certainly the capability of providers at the moment is only getting more and more remarkable. What do you see as being the dangers, if any, of where we are at the moment, for the outsourcing space generally?
SR: Yes, I think the entire model of this outsourcing industry could be challenged, as the full potential of things like cognitive learning, cognitive automation, machine learning are yet to come to the fore.
But there’s going to be a timeframe: I don’t see those dramatically affecting things, maybe for the next five to seven years, but if you look longer-term view, these will be major contributing factors.
For example, take the case of traditional software testing services. I’ve got this interesting analogy that software testing is actually no different from how cars are serviced, managed and tested. When the car breaks down, you take it to a service dealer. That service dealer has invested in people who know the cars and the parts; the service dealer has invested in the right kind of tools and is thereby able to give you a very quick turnaround time – anywhere from a couple of days to a couple of weeks, at the most, right? And building on this competence, they are also able to advise on non-functional areas, like if your car is secure enough or not.
A big parallel can be drawn to software testing. There’s functional testing and non-functional testing. The minute you know the application, the domain, you have to assemble a team of people and be able to provide testing as a service. Now this is a huge, radical shift. Of course, I’ve taken a lot of liberties in giving this example and drawing this parallel.
While it might work 100% in car servicing, it is very difficult for every company to know every customer that’s out there, right? So the analogy stops somewhere, but I’m making the point that customers will question if service providers can offer more reliable and more cost effective testing services.
And some of these models exist today, as we speak: there are disruptive companies that are doing it. Some of these will bubble up and the caution I will throw here is that we need to be acutely watching the trends. As a company, we need to learn, evolve and be ahead of the technology curve to create sustainable value for our customers and achieve meaningful scale rapidly.