P R Chandrasekar says he didn’t know Hexaware “that well” before he joined, but decided to take up the challenge to see how he could work in a different set-up. The initial doubt was understandable, as he was coming from Wipro, heading the IT giant’s $3 billion businesses in the US and Europe.
There were other reasons: Hexaware, a mid-cap IT firm, was still recovering from the $20-25 million provisioning it had to make for losses on exotic forex transactions.
A year after joining, the Vice-Chairman and CEO of Hexaware can look back with some satisfaction. The firm’s second quarter results for calendar year 2009 beat market estimates, with its net profit jumping four times to Rs 39.5 crore from Rs 9.5 crore on a year-on-year basis and doubling on a sequential basis. The company managed to go above its revenue expectation for the quarter. “I think we have improved on all the parameters. The growth margins are up and so are the operating margins,” he said.
Chandrasekar is the second outsider-CEO after Rusi Brij, of a company which was founded by Atul Nishar in 1989. Nishar is now the Executive Chairman and Chandrasekar said he was happy that “Atul has given me a free hand to run the show.”
The CEO hasn’t given the founder reason to complain. The challenges were many. For example, the manpower utilisation rate, at 63.7 per cent, wasn’t sustainable. Chandrasekar has now brought that up to 75 per cent by, among other things, putting some employees on a virtual bench (no work and so, no pay) and consolidating many of the centres.
“If I had not done the things that we did, we would have been in a tough position now. The good news is we have already taken back 80-100 people. We have also communicated to people that by the end of this year we will take all the people on the bench back,” Chandrasekar said. On operations, he introduced two things: reorganisation of the company by focusing on verticals and integrating the acquired entities to create better opportunity.
By integrating some of its acquired entities like Risk Tech, its BPO arm Caliber Point and Focus Frame, the company is now getting into cross-selling opportunities.
Chandrasekar said Hexaware was pursuing 10-12 deals along with Caliber Point, its BPO unit. “Caliber Point operated as an island. Today it is integrated with Hexaware. Now we have a business technology outsourcing story, rather than just a BPO. This is not an easy transition. But that is happening now,” Chandrasekar said.
His colleagues would agree. The vertical focus — BFSI, healthcare, travel, transport, hospitality and logistics, and emerging verticals — itself has meant a huge change.
“One of the reasons for verticalisation and my most important intent was to create ownership. Ownership that makes the person think, how do I grow this account,” said Chandrasekar. With this set-up, each vertical head is accountable for the profit & loss of his unit. The idea was to make them run a business of their own, which also makes them take tough decisions on investment.
Mid-cap firms, he said, had their task cut out. “The big guys have not only gone up the value chain and learnt all the tricks of the trade, they are frankly much more cost-effective. They have too much of economies of scale,” he said.
So, what makes him bet on Hexaware? Chandrasekar says “Some of the relations that it has with its clients is amazing. You might not even find it in many other firms. Two, its IPs (intellectual property). I was amazed to see the number of IPs Hexaware has,” he said.
Hexaware shareholders would hope for that.
