“Leaders get the best business on board,” says Dr. Anand Deshpande, founder, chairman and managing director of Pune-based Persistent Systems (Persistent). It is this clarity of vision that has helped Deshpande and his team take Persistent to the position of market leader in the outsourced product development (OPD) space. “As a relatively small company, one must identify a niche and seek to be the best in that niche,” he explains. Right from the beginning, Deshpande had no intention of competing with the bigger names in the technology industry. By identifying multiple opportunities in OPD, Deshpande has taken Persistent from a small outfit to a company that grossed revenues of Rs. 6,011.56 million for the fiscal year 2009-10.
On home ground
Following his bachelor’s degree in technology from the Indian Institute of Technology, Kharagpur, Deshpande went to the U.S. to earn a doctorate in computer science from Indiana University in 1989. After a brief stint at Hewlett-Packard, California as a member of their technical staff he returned to India in 1990. As his friends and family were based in Pune, the city was a natural choice for Deshpande to set up base. “As I started out, I found small projects to work on through my associates in the U.S. I soon realised that U.S.-based companies were opening up to the possibility of getting work done out of India,” he says.
Speaking of initial struggles, Deshpande says that setting up of infrastructure proved to be the biggest challenge. “Back then, it took months to get a phone connection, and Internet connectivity was especially poor.” Getting capital was yet another challenge, Desphande made an initial personal investment of Rs.3,60,000. As business grew, Deshpande applied for his first term loan of six lakh rupees.
“When we started we did not go the venture capital route,” says Deshpande. Today, the company has a slew of investors including U.S.-based Gabriel Venture Partners, Intel Capital, Hewlett-Packard and the Indian arm of Norwest Venture Partners.
As far as ramping up human resource was concerned Persistent decided to go slow and steady. Deshpande says, “We have seen steady progression from recruiting three people in our first year to becoming a team of 25 in five years to our present number of 5000.” He maintains that the organisation follows a flat structure where people are accessible at any level.
Since its inception, Persistent has never moved away from its focus area – technology, and are constantly on the lookout for exciting projects. Deshpande believes that now is the right time for Persistent to cash in on the disruption cycles for computer hardware. “In this industry, manufacturers have to constantly re-look at their products in order to improve. That is the only way for them to grow,” he explains, adding that Persistent has built on its expertise to provide end-to-end solutions across all phases of product development.
Founder: Dr. Anand Deshpande
Industry: Outsourced Product Development
USP: Persistent benefits from being a niche space operator where competition is sparse
City: Pune, Maharashtra
The company has also tried to keep most of its projects offshore. “For our first 13 years of operation, we did not have anyone onsite,” states Deshpande. In the future, Persistent looks to up its onsite presence only up to 5 per cent of its employee strength.
Perhaps, one reason that Persistent has managed to keep its onsite presence to a minimum is the rapport that the top management shares with its clients, thereby, building trust. Even when times were tough, case in point— the economic recession hitting mature markets, Deshpande took a proactive stance of getting to know his clients better. Most U.S.-based companies had cut their spending by about 15 to 20 per cent and this impacted Persistent. However, Deshpande traveled extensively, meeting chief executives and other top management professionals in order to understand their requirements and accordingly provide value addition. And Deshpande states this exercise truly helped develop the business further.
As the markets picked up, Persistent made some key investments in the areas of cloud computing, analytics, enterprise collaboration and enterprise mobility. “These investments helped us build specific capabilities to take to clients,” says Deshpande.
Another milestone for the company was when it went public with an initial public offering in March, 2010, where they raised about 128 crore rupees. Of this, 20 crore has been allocated towards hardware and equipment, another 77 crore towards development of infrastructure in Pune and Nagpur while the remainder has been set aside as general reserves. Deshpande is confident that there will be sustained investor interest in Persistent. “We are a profitable company operating in a niche space and investors know that accelerated growth is certainly possible in niche spaces,” he says.
Going by size and track record, Persistent is well positioned to continue being a dominant force in the OPD space. “We have to scale up, do whatever it takes to remain leaders,” stresses Deshpande. The company will look to strengthen its hold in the U.S while also exploring newer geographies such as Europe and Japan. “We are also keen to be a part of the action in India,” adds Deshpande.
In the June 2010 quarter, Persistent top line grew by 37 per cent to Rs. 181 crore, fuelled by a near 100 per cent revenue growth in its information technology segment. The stabilisation of markets has led to clients increasing their research and development spends, resulting in further growth opportunities for Persistent. Given its achievements of the past and plans for the future, it’s no surprise that all eyes are on Persistent.
One boss to the other
From his interactions with CEOs of his client companies, Persistent System’s founder, chairman and managing director, Dr. Anand Deshpande, has observed a certain trend in the thinking of top management executives:
Management bandwidthUniversally, CEOs need the right people at the right time and place to delegate work to. There is only so much one individual can oversee and this is where you should look to make his / her life easier.
Revenue vs. savingsFor a CEO to be interested in your proposition, show him / her growth as opposed to talking savings. Instead of taking a cost-oriented approach point out ways to improve the top line.
Build relationshipsCEOs are not sales guys; they are relationship-oriented as opposed to transaction-oriented. Invest time in building a rapport with the top management.