Tiger Ramesh, CEO, CSS Corp, is now channelising his energy to take the company through its next phase of growth after raising capital from Partners Group. Recently, the company gave an exit to its earlier investors – SAIF Partners, Goldman Sachs and Sierra Ventures
S. PREM KUMAR
Tiger Ramesh, CEO, CSS Corp, has worn multiple hats in his professional career. As an entrepreneur, he led two companies – Bangalore Labs and Quintant Services (which was bought over by iGate) – in the IT/ITeS industry and also started an eco-wildlife resort called Cicada, which he later sold to Café Coffee Day.
As a professional, he joined CSS Corp, a mid-size IT services company, in July 2011 as its CEO with the mandate of improving the company’s profitability, expanding into newer service areas and eventually giving good exits to its investors. When we interviewed Ramesh in July 2012, he spoke about how his primary goal was to lead the company to a successful IPO. At the time, he said: “The work in front of me is different from what I have done in the past, but this is what excites me today.”
Over the last nine quarters at CSS Corp, Ramesh has played a key role in putting together a leadership team, turned around the profitability of the company (from single digit margins to double digits) and also ensured that the first phase of growth gave an exit to its investors including SAIF Partners, Goldman Sachs and Sierra Ventures. A consortium of investors led by Partners Group, a Euro 28 million global investment firm, bought over the exiting investors’ stake by way of a US $270 million leveraged buyout. Ramesh says, “The first phase for me was about ensuring that investors like SAIF encashed their investment. It was also testimony to the fact that what we implemented worked. Now, it’s time for the second stage of value creation for our next set of investors.”
The next phase
CSS Corp is now gearing up to position itself as the partner of choice in four key service areas. One, the company wants to bring in a strong analytics layer into its technical support services. This, the company believes, will help its clients understand their customers better. Two, the company is working on a seamless process to manage predictable performance on the cloud and deliver this service to clients. Three, the company will help its clients rapidly deploy mobile applications and also put together a mobility strategy and finally, the company also realises that since IT infrastructure is going more and more virtual, the information security needs of company are also becoming different and CSS Corp aims to offer services around virtual infrastructure information security.
Ramesh explains: “While we are not drastically changing our focus areas, all these four areas of service are in line with market changes. Recently, we organised CSS One World, a conference for our customers in the U.S. Over 65 large customers of the company resonated with these changes.”
Over the last two years, the company also focused on improving the utilisation of its people resources. Today, it employs over 5,400 people and it expects to add 2,000 to 3,000 people over the next three years. Ramesh adds, “One of the things we looked at very seriously over the last few quarters was to essentially improve our bottomline, even if it meant sacrificing topline growth.”
CSS Corp Labs, the research and development arm of the company is focused on creating intellectual property that can be monetised. For example, in the area of cloud services, CSS Corp Labs created this tool called Hapx, a single dashboard to manage performance on both public and private clouds. Research is also being done to create IP in line with its mobile services strategy, to help efficiently deliver mobility services to its clients.
Ramesh also realises that client acquisition and closure of large deals is crucial to deliver on growth. He talks about establishing a level playing field in certain service areas to ensure that CSS Corp can compete effectively with both mid-sized and large IT services companies. He also says, “The fact that Partners Group is on board as an investor can make a huge difference. As a large investor and fund of funds, the kind of introductions it can give us is tremendous.”
Readying for an IPO
One of the key focus areas of the company is to get ready for an IPO four years from now. There are several aspects crucial to make this happen – quarter-on-quarter growth, sustainable profitability over a series of quarters and predictability to revenue growth. Of course, a sound leadership team is also crucial and one of Ramesh’s prime areas of focus is to continue to build his team. CSS Corp roped in IT industry leaders from some of India’s top companies including Suranjan Pramanik as chief sales officer, Purnima Menon as chief marketing officer and Raj Reddy as chief delivery officer. “This is a team that is working well together and it’ll be the team that’ll lead the company to the IPO,” says Ramesh as he wraps up.
|Ramesh was implementing his turn around plan to enhance profitability||Completed first-phase of growth. Improved margins from single to double digits.|
|Establishing new service areas including mobility and cloud||CSS Corp Labs creates IP, launches Hapx, a tool for cloud services. Clarity of offerings in the area of mobility, cloud, information security and analytics|
|Working towards giving an exit to SAIF Partners, since it had invested 7 years back||Raised money from an investor consortium led by Partners Group, gave an exit to SAIF, planning for an IPO in 4 years|
STARTUP SCHOOL WITH TIGER RAMESH, CEO, CSS CORP
Tiger Ramesh, entrepreneur-turned-professional and CEO, CSS Corp, talks to us about building competitive advantage, managing a turnaround and the entrepreneur-investor marriage.
Building a competitive advantage for yourself
Tiger Ramesh now leads CSS Corp, an IT services company with services in the area of cloud, mobility, analytics and information security. Operating in such a crowded sector with a large number of competitors, big and small, Ramesh gives us a glimpse of his strategy to tackle competition.
My experience is that one should never get bogged down by the size of his or her competitors. The most crucial aspect of beating your competition is to establish a level playing field. For example, mobility and cloud services, which are our focus areas, are fairly new for larger companies as well. Once you establish a level playing field, you compete on your differentiation.
For us, in addition to competition on the customer-side, we have tremendous competition on the resource side as well; I mean, we compete with several companies to hire good talent. Even here, the same rule applies. If you are hiring people for mobile app development, make sure you showcase to your prospective employees the kind of cool stuff they’ll get to work on. Be it in the market side or in the talent side, establishing a level playing field goes a long way.
Also, as we scale up into a larger company, we’re working towards retaining some of the good characteristics of a smaller company like building a close relationship with the team and customers, being flexible and being nimble-footed.
However, I have to agree that all this is easier said than done. Establishing that level playing field and maintaining that is as tough as it gets.
Recognising and acting on the brutal facts
When Ramesh took over CSS Corp as its CEO, the company’s margins were in single digits. In about nine quarters, he played a very important role in replacing bad revenue (low margin revenue) with good revenue. He narrates how:
Before I begin, let me tell you that I was lucky to have the right opportunity to engineer this change to higher margin growth and, fortunately for me, things worked out. Even before I joined CSS Corp, the company was known for its quality of delivery. Its tagline, 100 percent referencability, came from the fact that all its customers were happy with the quality of delivery. Most of our efforts were focused on improving utilisation of our resources to increase margins. We also had to brutally refuse some low-margin work even if it meant sacrificing topline. Our next focus area was to build a proven sales engine for the company.
At a broader level, I’d say one of the key aspects to make any change work rests on one’s ability to look deeply inside the organisation and recognise the brutal facts. One should also have the appetite to make ruthless decisions. Most times, I believe, the problem lies within an organisation rather than outside.”
From entrepreneur to ceo
As mentioned earlier, Ramesh is a serial entrepreneur with three startups to his credit. He joined CSS Corp as a professional CEO after he sold Cicada, an eco-wildlife resort to Café Coffee Day. Ramesh told us that one of the reasons he took up the job at CSS Corp was that he believed it gave him the opportunity to work on something he had not experienced in the past. While he had scaled up startups to growth companies, he hadn’t led a company to a larger level nor had he taken a company to the bourses. He talks about this transition:
Once an entrepreneur you’re always an entrepreneur. As a startup founder, sometimes you’re alone without any safety net around you. In such situations, you take a lot of decisions by instinct, and this changes the way you work permanently.
When I joined CSS Corp, I behaved like an entrepreneur. I never once thought that I have the safety net of a monthly salary. I behaved like the entrepreneur who ran CSS. The safety nets don’t matter and I am convinced that this experience can be very valuable in the corporate world.
Making the board work for you
For companies working in fairly complex environments, the role of board members goes beyond delivering value to a company’s shareholders. Business leaders often talk about how it is crucial that the board, in addition to keeping in mind the interests of shareholders and maintaining corporate governance, also plays a crucial role in helping with strategy formulation and decision-making. We often hear startup founders talk about how board members who’re experts in specific fields/sectors really help them get through tough situations in front of them. We requested Ramesh to share his experience of working with board members.
There is no general answer to working with your board. It varies from person-to-person and depends on ones management style. In my case, I have always built wonderful relationships with the various boards I have worked with. It is crucial to win the trust of the board. At CSS Corp, I often expose my direct reports to directly make presentations to the board.
As is often said, at any company it is important to have one or two independent directors who know the business. It is important to have a good independent director to head the audit committee. High quality corporate governance and its importance can never be emphasised enough.
Picking the right set of investors
Ramesh has raised money several times for his entrepreneurial ventures and now at CSS Corp. It is important that entrepreneurs and investors have the right chemistry to make the marriage work. Ramesh’s thoughts:
First of all, let me tell you that not many people have too many choices at the early stage. All the success stories we hear about today, even for them, there were very few investor choices at the early-stage. It, of course, becomes easier as you scale and look for capital for expansion.
Theoretically, I’d say there are three aspects you should look for while picking your investor, if you are fortunate enough to have that choice. One, think through if the investor understands the dynamics of your business and the sector you operate in. Two, can he help you build the right set of relationships and give you the right introductions? Finally, is he giving you the money at a valuation that works in your context?