Hexaware: growth in a cold climate - PR Chandrasekar

As companies tightened their purse strings during the global economic downturn, there was a lot of talk about the possible impact on the information technology (IT) and business process outsourcing (BPO) industry.

"You'd have to have been living on another planet if you didn't see that things were very rough for a while," says PR Chandrasekar, CEO of Hexaware, a leading global provider of IT, BPO and consulting services with more than 20 years' experience and a prominent position in the Indian market.

"It was a tough time, and decision-making came to a near halt. For a while, before the world entered the meltdown, we didn't know how the situation would play out, but once we understood it was bad, companies realised that they had to cut costs. I'd say that it's better to know that things are dire than not know what is happening, otherwise decisions can't be made."

India's leading light

There were, however, a few bright lights amid the gloom of the global financial crisis. While the recession put a significant strain on IT budgets in the US and Europe, India became a growth engine. Technology research firm Gartner revealed that the country's IT & BPO services market grew by 7.3% in 2009 on the back of the downturn. In addition, the study estimated that the industry would grow into a $1.8bn by 2013.

The future is certainly looking good for Hexaware too - the firm is ranked the fastest-growing mid-sized company in India.

"India has always been strong, it's just that we never looked at it as a significant market place," says Chandrasekar. "However, over the past couple of years we've really focused on the region because we suddenly realised that this is a huge share of the market, so it made sense to go after it. We are listed on the stock market, we're profitable, growing steadily, hiring strongly and we have seven centres around the world, including five in India - Mumbai, Chennai, Pune, Nagpur and Bengaluru, which has just had its first anniversary."

Hexaware is also looking to push its presence in the UK.

"Surprisingly, and unlike many global firms, we have less of a presence in the UK compared with continental Europe," says Chandrasekar. "This is something we should correct as it doesn't make sense for us not to be active; however, things are looking up."

Indeed, business is increasing for the service provider, and the company has enjoyed a healthy performance this year, despite suggestions that the IT & BPO services sector faces an uncertain future due to a fall in volumes and wage inflation. In India, Hexaware recently revealed that its profit after tax increased to Rs647m in the third quarter of 2011, up 54% year on year. In addition, it signed its largest deal to date, an agreement potentially worth $177m with an existing US client. Its tools and applications are increasing too, as is its human capital as the company steadily ramps up its delivery capability to cater to the demand uptake visible in the marketplace. The global headcount at the end of Q3 2011 increased to 8,164, an addition of 745 employees from the previous quarter and an increase of 1,856 compared with September 2010.

On top of that, Hexaware is expecting a further increase in revenue for Q4 2011 - estimated at over $82m - and is confident that its growth will continue.

"2009 was a difficult year for the company, just like it was for everyone," Chandrasekar explains. "However, since the beginning of 2010 we've been growing steadily. The company is very healthy. It has been a good story for us."

Hexaware has upgraded its annual revenue guidance for the year to a minimum of 32% for 2011.

Travel, transportation and finance

The thing that differentiates Hexaware from other IT & BPO service providers is its focus on two sectors - travel and transportation, and the financial services industry. Chandrasekar believes that this gives the business a competitive edge.

"In these two areas, the company builds knowledge, hires staff, invests in tools and builds solutions so that people will actually come to us and we can be their partner," he says.
It is this partnership approach to ensure maximum value accretion that companies seek.

"We are going to our customers and telling them that we can be someone who understands their business and can solve their problems," says Chandrasekar. "We can even sit at their table to think about their future, and we'd like to get a seat when they make decisions. But we can't do this with everyone. This is the main reason we're so focused. In order for an IT & BPO service provider to be a good partner they have to be able to offer real value to that client and fully understand their business."

Chandrasekar believes that both partners being equally committed are key to a successful engagement. "Both sides have to work," he says. "If a client is not interested in a relationship then it won't work. We give our customers very serious management attention; for example, the chairman, myself or one of our top 20 managers will spend time with that customer. We work with them to move towards their goals."

As well as being a strong partner, it is also the company's focus on innovation and personalisation that keeps existing and new customers satisfied.

"We might be small in comparison with IBM or Accenture, but we can do things that even some of the big guys can't," says Chandrasekar. "We have established small centres of excellence at individual unit levels that have specific goals; for example, we built Akiva for a customer. This is a data-masking tool that masks the sensitive information in a non-production database, thereby making it safe for wider visibility."

This is just one example of how serious Hexaware is about innovation; it is part of the company's culture and a focal point internally.

"We have launched an innovation channel," says Chandrasekar. "Here, all employees are encouraged to feed ideas into the organisation. In turn, these ideas are vetted by a team of people. Some ideas are picked, and we'll find a way to take it further, be that with a tool or application. It creates a bit of a buzz and a competitive environment. It's key to our business as it helps us keep young and vibrant."

Continuous evolvement

Looking ahead, what will the market look like for IT & BPO service providers and their clients? Whether service providers can future-proof their business is a pertinent question.

"It's vital to keep evolving," explains Chandrasekar. "Unfortunately, we are all on a treadmill. You can't stop or you'll fall off; however, one of the lessons we've learnt is that you have to remain focused. We'll continue to build on our transport and travel, and financial services expertise, and grow these areas."

So far, the company's plans seem to have worked, and as organisations focus on their core competencies and look to cut costs, a healthy service provider is the one that is likely to remain popular.