In an exclusive interview with DQ Channels, Arun Nathani, CEO & MD, Cybage Software
In terms of geography, who are the major contributors to the product’s revenue?
78% of our revenue comes from North America, 12% from Europe including UK and rest comes from other regions such as Australia, Singapore, Japan, Indonesia, etc. India’s contribution is at one per cent, but with scope for robust expansion. 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. More than Europe, Singapore has been one of our major contributors in the APEC region in general.
What are your views regarding IT Professionals in India?
India is the home of IT professionals. So any enterprise that ‘you work with, there is an abundance of talented professionals. However, the inexpensive nature of labour often makes enterprises under-appreciate the skills or the technology provided. Conventionally run enterprises most importantly, do not have the understanding, hence the appreciation for data-driven techniques.
Do you have any plans to hire people from other countries as well?
Countries like Indonesia or Malaysia do not have an abundance of homegrown talent neither do they have the framework to nurture them or expose them to new opportunities. Global consulting organizations do not know how to unearth the talent in these countries and will only work in a step-tight recruitment structure. On the other hand, we have a deeper understanding of working in these places hence these enterprise also benefit when they partner with us.
We signed quality and a large number of contracts in Singapore, Indonesia, etc., which may be a company very small or very large. Japan has not been a success, although we tried very hard. Chinese companies suffer from various language constraints.
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, Retail and the Technology vertical rounded off by 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.
We also provide services in the retail sector, which is now being driven by 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 any other such as manufacturing or logistics. We stayed focused on this vertical that was influenced by internet the most, in the most fundamental way that retail transactions are done. Online media is the best way to reach out to end-users, and this is where we are focusing now.
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 the art of offering a comprehensive development to clients.
How technology has been a big game changer in the business of Cybage?
We may not understand the whole business spectrum, but we have a solid understanding of business technology. We specialize in the ‘now’ of technology. In the last 10 years, technology has emerged as the prime differentiator for every enterprise. When businesses are evaluated today, neither cost effectiveness nor revenue generation cycle are given as much importance and its implementation by a business to make money.
With technology comes new innovations, thereby contributing to the evolution of the business ecosystem. Considering its over-arching role today, even CMOs are thinking on the lines of – ‘I can use XYZ technology to get 30% more customers’. Therefore the role of technology is not limited anymore for cost and operations optimization but to even bring more clients and generate revenue. Investors are also trusting tech-focused enterprises as they bring in a lot more returns. It is as if every executive is now thinking like CTOs.
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. We are better suited for that than the traditional IT services hierarchical flow because we are adapted to it.
When a CMO is using technology to send emails to 1000 people, so he has to be perfect, as it is akin to delivering a product. We are very well suited to offer solutions that make such operations impeccable.
We have invested heavily into revenue driven systems, about $20 million in last 10 years to reap the benefits from our comprehensive, high-performance operational solutions.
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. Around 70%-80% of all leading agencies in the world, around are our customers.
Cybage is highly regarded in social media and by industry observers as we do not believe in playing with the numbers or distorting analytics to present a rosier picture. We work with utmost credibility to offer our users and stakeholders a clear vision of the enterprise’s progress.
How many employees are working in Cybage?
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. We should add 500 more in the next 5 years to facilitate foreign operations.
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.
Also, because many companies were already there and many of us professionals from Gujarat and Bengal may get back there and hire people. So we opened the center thinking about long-term without any cost difference.
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 place because my Mom and Dad had settled there at that time. Now when you look at that, we ratheWe also preferred building these centres with 1000+ people before opening our core centre because we need critical mass for economic sustainability.
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 varying 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 and 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?
So it is a little above 200, 3-4 will be from India. Most of them are project-based, 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 if we consider the overseas customers then the number will increase.
In terms of quality of people, is the supply 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 is working. The employment supply is still high as many menial jobs have been cleared by the respective governments. With AI intervention, the quality of skills on offer has increased and the situation will keep getting better.