The Black Book of Outsourcing has an interesting approach to rating outsourcing service providers. It relies on client feedback – on several aspects, including the ability to gather client requirements, risk mitigation strategies and corporate reputation – about a service provider to arrive at the final rankings. In 2010, Amba was rated among the top three KPO service providers and the very first investment research firm to be mentioned in the survey. So, what is Amba doing right? Mohan Alexander, co-founder and chief executive, says that it’s all about client servicing day in and day out.
Today, Amba Research offers investment research services to six of the top 15 investment banks and several of the top 15 asset management companies around the world
Today, Amba employs close to 725 people across India, Sri Lanka and Costa Rica. Over 50 per cent of them are CAs (chartered accountants) or CFAs (chartered financial analysts). A key ingredient in Amba’s secret sauce is its ability to attract and then retain such highly qualified people. The company engages in sophisticated research work for its clients. From researching a sector to building complex financial models, Amba’s analysts work for over seventy clients around the world. For these clients, quality of research is as important as the cost benefit reaped by outsourcing the work. It’s a model that allows a client’s in-house research analyst to spend more time on revenue generating activities and rely on data from companies like Amba.
The four founders first started talking about investment research outsourcing back in 2003. Then, Alexander was deputy head of Asia research at Deutsche Bank. The other founders held senior positions at companies like Goldman Sachs and JP Morgan. Alexander says, “Our backgrounds were exactly in this field. We understood the space and knew there would be takers.”
The obvious next step was to setup an office in Bengaluru and hire people. But Amba was different. It’s founders analysed the opportunity in several countries including Manila, Philippines and Kuala Lumpur, Malaysia before opening its first office in Colombo, Sri Lanka in 2003. “It was a calculated move,” says Alexander. In Sri Lanka, the brokerage market wasn’t really big, but there were a fair number of people with CAs and other equivalent degrees. They typically took up jobs as finance managers but the thinking was that they would prefer working for a company like Amba where the work would be more stimulating. It also made sense from a cost standpoint, compared to other markets.
In the early stages, friends and family, in addition to money invested by the founders, funded the company. Laying the platform was the prime focus. After hiring a small group of people, the first two clients came on board. “Since then, we’ve been hiring eight to 10 people every six weeks,” adds Alexander.
Founders: Andrew Houston, Mohan Alexander, Brad West, Anand Aithal
Location: New York, London, Singapore, Bangalore, Colombo, Costa Rica
Revenue: Upwards of US $30 million annual
No. of employees: 725
The next phase
In 2007, Amba raised around US $7 million from Helion Venture Partners. The foundation had been laid and the company was looking to graduate to the next level. Several of its investment banking clients wanted near-shore research support. The company singled out on Costa Rica and opened an office there.
Today, Amba serves six of the top 15 investment banks and several of the top 15 asset management companies around the world. Its area of expertise spans everything from equity, fixed income and credit research to corporate finance and quantitative services. It also started offering services in the area of fund sales and marketing. Preparing due diligence questionnaires, pitch books and fund factsheets is now part of its repertoire.
The global recession in 2008 did affect Amba. The growth was flat, but according to Alexander its core clients and most of the large ones, stayed with them. “In terms of our risk-reward profile, we came out stronger after the recession,” he says. Though Alexander wouldn’t’t reveal the exact revenue numbers, he confirmed that the company’s annual revenue was north of US $30 million. His next bet is on extracting more work – especially in the areas of compliance, fund sales and marketing – from its existing clients. He is also gunning for more growth in the Asia Pacific region.