We work with technology companies and have mastered how to do fuller development, Arun Nathani, Cybage Software

Arun Nathani, CEO & MD, Cybage Software

In terms of geography, who are the major contributors to the product’s revenue?

Our 78% of our revenue comes from North America, then 12% comes from Europe including UK

and balance comes from the rest of the world which is generally Australia, Singapore, Japan, Indonesia, so India is like one per cent. So, what a change from that time, USA was big at that time also. The USA was probably like 85-87 now it’s like 80-78. Europe has increased but more than Europe, Singapore has been one our most rocking areas interestingly and APEC in general.

What are your views regarding IT Professionals in India?

When you work with India, India is a home of IT professional. So any enterprise that you work with, they can hire their own people. They don’t understand the value as much as the technology. You know how conglomerates and all are like, they won’t have the same appreciation for technology, maybe because the manual labour is so cheap or maybe it is driven by a lot of people-centric things. Entrepreneurs are like family business is going on; they don’t have the same appreciation or data development.

Do you have any plans to hire people from other countries as well?

Countries like Indonesia or Malaysia and all these countries, they don’t have an advantage of home

talent and they don’t have a focus of their guys. Like a global consulting or services organizations will not go to Indonesia as much as I will, I mean they will, but not at the same level. They will be like step tight. So they get the value when they see a partner like us.

This is what we think, we signed very good and large contracts in Singapore, Indonesia and all, which may be as a company very small or very large, Japan has not been a success, and we tried very hard. Chinese companies have language constraints. At least we worked in Japan 10 years back, we have 15 per cent revenue from there, Australia also we do, but none of these is really massive or game changers.

What are the top verticals? Can you name one or two customers?

Our largest vertical is Travel and Hospitality, in terms of revenues, followed by Media and Entertainment, followed by Retail, followed by what we call Technology vertical. After this comes our logistics and healthcare. In T&H, we work with one of the worlds’ largest travel website/technology company, another luxury hotels chain owned by a multination hospitality conglomerate, and another Spanish IT provider for travel and tourism.

Then retail, so in retail also e-commerce. Either you sell services, which are travel services. Travel services are perishable goods. Our services sell goods which are retail. The Internet has made a major impact compared to manufacturing, compared to logistics, there also changes have happened but not like this. We stayed focused on vertical that was influenced by internet the most, the way business is transacting. Online media, when we talk about today, we don’t have television, we talk about computer, YouTube and all that!

You didn’t go into sectors which is infrastructure heavy and in the first phase of more IT savvy?

It’s where we work with some of the world’s biggest ISV’s. This was the whole ecosystem. Your play depends on the vendor who is not focused on one article, there are thousands of them, the platform delivers what you call, and we are very good at it. I will tell you where we are different from the others. That will be your area of interest. We are one of the pure probationary companies, unlike other companies. Other companies are 50% probationary 50% enterprise. Ours is 90% probationary, which means we work with technology companies a lot. We have mastered how to do fuller development.

How technology has been a big game changer in the business of Cybage?

We may not understand the whole business, we may not understand the bike/motorcycle, but we understand technology. So what is happening now, this is how we specialize in. Now what has changed in the last 10 years, Technology is the differentiator for every enterprise. So when they look at the business, they don’t look at it as a cost-saving anymore, they look at it as a revenue generator, they use technology to make money.

They come with new innovation so in other words, technology is contributing. The chief marketing officer will think I can use technology to get 30% more customers. So now he uses technology not to cut costs but to make more money. It’s okay investing in technology because returns are a lot more. So in some ways now they all are thinking like CTOs.

Now when we go to large technology companies, they are selling technology and making money. CIO’S Enterprises are not selling, they are reducing the cost. We were working but we were selling it.

How you are working with the CMO’s in terms of your business?

The CMO is selling it, so he is our customer. So in a way you are cutting the middleman, you are going back directly to the enterprise’s CMO or CRO and working directly with them and we are better suited for that than the traditional IT services because we have always done that. When

CMO is using technology to send emails to 1000 people, so he has to be perfect, he has to think like

a product. So we are very well suited, what we have done now in the last few years and you know we are in the process, you will get to know little bit tomorrow also, we have invested heavily into revenue driven systems, we have invested about $20 million in last 10 years.

Can you tell me some specific numbers vertical wise?

Probably if you are looking at, we will have about 25% of our revenue coming from travel and hospitality, 23% comes from media& entertainment,21% from retail, and 17% from technology. Cybage is a leader in the Media & Entertainment sector working with some of the largest media & entertainment companies, all leading agencies in the world, around 70%-80% are our customers, we are very good.

You see when companies publish reports, they say now 18% is coming from digital or 20% is coming from digital like everything is digital. They say its game playing. If

you have noticed, Cyabge is highly regarded in social media and we never ever played any games and we know who plays the game even with analytics.

How many employees are working in the Cybage?

Frankly, that is one place our numbers are <18:18> for the last three years but our revenues are increasing. Overall we have 5700 employees. Pune will be about 4,500 or 4,700, Gandhinagar is around 450, and Hyderabad is 300 and left is overseas. Toronto, also in the US, all over we have customers. But unlike other companies, our revenue from outside is very small, it’s like 7-8% comes from outside. 7-8% revenue which means a number of people are 2% but we should add 500 more in the next 5 years.

Are you planning to hire 500 people for Pune or Hyderabad or Gandhinagar centre?

No, Hyderabad and Gandhinagar are very good centres. Hyderabad is an exceptionally good place

because of the control of its efficiency due to some reason. In Gandhinagar, we are a very strong brand. Why you placed the centre in Gandhinagar? So what happened, when vibrant Gujarat was

going on, we felt that Gujarat will be a better place to invest because we don’t know how expensive Pune may get or Hyderabad may get so this was planning for future. Because many companies are there and many of us professionals from Gujarat and Bengal may get back there and hire people. So we opened that for long-term thinking but we got no cost difference honestly.

Why don’t you have any centre in Bombay, Delhi or Bangalore?

I will give you a reason; we opened in Hyderabad because we had close customers in Hyderabad like Microsoft. We opened in Gandhinagar because we had bit sentimental attachments with that. Because my Mom and Dad had settled there at that time. Now when you look at that, we rather build these centres with 1000+ people before opening our core centre because we need critical mass for economic sustainability. You need people on the bench in small centres.

How many people on an average bench are there in the IT Services Company?

It’s about 15% of the people, it varies from season to season. When campus season is going on and new people are coming as a trainee it goes about 20%. But if you got to afford a bench then it's 10%. In that 10%, there are different skills.

15% of 5700 goes around 1000 people, so is it sustainable?

No, Actually 5700 is whole company strength. In that 1000 are not billable that includes R&D department, centres of excellence, marketing, senior leadership, recruitment, etc. So leave around 700 and we are left with 5000. 15% of 5000 will be around 750, so 750 includes around to 200 - 300 trainees. You always have around 50 maternity leaves, it’s a fact and we are fine with it.

We are proud that we have over 30% of women employees, which is very good. You always have floaters in the organization, because we have 50 different skills of different seniority. For example, if with customers I am starting the project after six weeks. So after six weeks when the project is over, technically your bench is over, people are on notice period. But in reality, we have to still represent them so the bench is like that only.

How is the attrition rate?

Attrition rate is about 17-18%, it is not high, it’s not low. Attrition rate is indeed as it is very high in India so you need good measurement environment. At a very high level, Cybage is the most efficient, structured company, it’s a very balanced company.

What is the total number of customers?

Arun: So it is a little above 200, 3-4 will be from India. Most of them are project-based, something it is for relationship building, some of our Indian customers are our counter partners. As if you work for the US company and sent for India, so they might get some business from that also. So we consider the overseas customers if you add those then the number will increase.

In terms of quality of people, are the supply is not given up?

IT industry has become mature enough and fundamentally robust enough that without compromising with the quality of people in pockets, the overall structure we are working, the mythologies and the hierarchies we have built, we actually deliver not just on cost any more. So you have a customer in automation they have 5 people and more 5 people who can deliver may be better than those 5 people.

So it has come to that point, it’s possible. So I don’t see any addition, I hear it a lot but whatever it is, it’s not getting worse it may not be getting better. And especially in the last 3-4 years, I don’t see it grow in terms of headcount so in the campuses we have very good talent which actually looks like absorbed.