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 India
Infoline, October 5, 2006
September 28, 2006 - Servion Global Solutions'
fundamental premise is that every time a customer gets in touch with an
organization, it creates an opportunity for that interaction to be converted
into a mutually satisfying and long-term relationship. The company can help
one analyze one's customer interaction strategy, offer suggestions, and where
required, a corrective course of action. This approach has already helped
leading organizations across the world obtain more out of their existing
systems and infrastructure, reduce operational costs, increase revenue
generation, and enhance
customer satisfaction. Servion's domain expertise
encompasses a wide range of
business sectors such as banking & finance,
insurance, outsourced Contact Centers, telecom, government, and
transportation. This is reflected in its blue chip customer base of more than
400 clients and 1000 installations worldwide.
Mr. Shankaran Nair joined Servion Global Solutions in 2003. He has been
instrumental in setting up the Business Development practice at Servion for
the Asia Pacific region. Nair brings a unique blend of entrepreneurial
capability and professional management training and skills. He has played a
key role in the re-organization and restructuring of the approach to business
planning at Servion. Prior to
joining Servion, Nair was the youngest Area Sales Manager (Tamil Nadu) in
Goodlass Nerolac Paints Ltd., where he was responsible for the third largest
revenue-generating branch for the organization. He joined Gum India Ltd. in
1985 where he played an entrepreneurial role. In 1999, Shankaran moved to
eShakti. This is an online store, a start-up that services Non Resident
Indians in the US. He holds a
bachelor's degree in economics from Loyola College, Chennai and a master's in
management (marketing) from the Indian Institute of Management (IIM),
Bangalore. In an interview with
Hemant P. Maradia of India Infoline, Mr. Nair says the global CIM
applications market will reach US$ 2.6 bn by 2008, more than doubling from about
US$ 1.2 bn today. Tell us about
the Customer Interaction Management (CIM) solutions market, its current size
worldwide as well as in India, leading companies in this business, your market
share, ranking, etc.?
The CIM industry is organized into four ‘blocks’ viz. telephony companies,
global systems integrators and consulting companies, product companies, and
CRM companies providing services in six ‘blocks’ viz. application maintenance,
application development, products, systems integration, consulting, and R&D.
Each of these firms play in one or more of the above mentioned. Datamonitor
estimates that the global CIM applications market will reach US$ 2.6 bn by 2008,
more than doubling the approximately US$ 1.2 bn applications market today.
Servion is uniquely positioned as the only global organization in the CIM
domain that offers end-to-end services in all six blocks – application
maintenance, application development, products, systems integration,
consulting, and R&D. Servion offers capability in all the nine blocks of
technology in the CIM applications market i.e. IVR and speech enabled self
service, CTI, Web solutions, Email, Outbound solutions, quality monitoring,
Speech, Work Force management and Consumer Behavior Analytics.
However, when it comes to providing end-to-end service, Servion does not face
any competition. At what CAGR
is the CIM market growing over the last two to three years? What is the
outlook going ahead? What is going to be the key
drivers for growth in this
business?
The CIM market is growing at different rates in different parts of the
world. The extremes are defined as in the US at around 3% and the highest in
India at around 34%. The slower growth markets are the ones where the
technology has been in use for a period of time and the key drivers are now
technology enhancements. In the faster growing markets like India – use of
technology to enhance customer interaction is in its early stages. So,
technology adoption is a key driver fueled by rapid economic growth and
changing customer expectations.
How big is the Indian market for your CIM solutions given that it is the
leading ITES destinations in the world? How much of the company’s revenues
come from India? What is the future plan for the Indian market?
The addressable market in India for our solutions is around US$ 50 mn. Around
30% of our revenues come from India. We are very well positioned in the Indian
market with a list of marquee clients. Over 75% of our customers are in key
verticals like BFSI and Telecommunications. We are currently evangelizing
contact optimization to the newer verticals that are yet to adopt these
practices and technologies, as this will be a major growth driver.
Can you give us a break up of your
revenues in terms of products, software applications, systems integration and
support services? Also tell us as to how much of your revenues come from
marketing of your partners' products and solutions?
In the fiscal year 2005-06, the company had revenues of US$ 12 mn, which
translates into a year-on-year growth of 35%.
Share of revenue (region wise)
| Country |
% share in revenues |
| USA |
35% |
| India |
30% |
| EMEA |
10% |
| APAC |
25% |
| OSD |
10% |
| Consulting |
5% |
Products contribute US$ 1 mn to our total revenues.
What is your current employee strength globally? Brief us about your
expansion, capex and hiring plans both for India and overseas? Is hiring a big
headache for companies like you due to the lack of the requisite talent? In
that case how does the company cope with such acute shortage of skilled
resources?
Our current headcount stands at 400. We are now focusing on hiring talent in
CISCO & SIP practices primarily in India. Yes, identifying and hiring of
quality talent is a struggle mostly because of unrealistic salary expectation
as compared to delivery capability. We try to hire young talent and develop
capabilities within the organization in existing and new technologies.
What is the employee utilization? Is there scope for improvement there? What
are your HR policies for tackling the high attrition in the industry? Have you
effected any salary hikes this year?
Servion has always had a very team-based culture where access to top
management is easy. And, from its early days of inception, way back in 1995
problems were discussed, possible solutions brainstormed, and appropriate
decisions reached in ‘expertise groups’. This means that a member has access
to extended expertise of the entire team. This is a practice that has stayed
with the company from the time when it had just 10 people, till date when it
has grown to 400 people in strength. In corporate parlance, it is a much
decentralized organization.
Everyone in the company is encouraged to take risks. The management believes
that with risk comes great success. A lot of this is seen in the
unconventional designs we have developed and implemented for many of our
customers across the globe – from the implementation of an Interactive Voice
Response system for a conservative government organization such as Indian
Railways to the first time ever automated utility bill payment system for a
private sector bank.
Transparency, fraternity, warmth, access – these are words that are repeated
by employees while describing the Servion culture. Having grown from a
5-member organization in 1996 to 400 employees in 2006, with competencies
built in more than 10 domains in the Contact Optimization space, Servion
retains almost 90% of its startup work force.
Recently the company has taken up an internal agenda of Personal Work Ethics,
a measure to enhance cordial relationships within and outside the
organization. Prompt responses, accountability, transparency and integrity
would be the yardsticks by which the effects would be felt once the program is
in place.
Can you quantify your order pipeline in terms of no. of times the total
revenues? On an average how many new customers are you adding every quarter?
Can you split your revenues in terms of new clients and ramp-ups from existing
customers?
Order pipeline should be around 6-7 times the revenue. We add around 10 new
customers every quarter. They contribute 20% of total revenues.
How do you differentiate yourself from your competitors? What is your USP?
Servion enables organizations to reduce the gap between customer expectation
and customer experience through its Contact Optimization Model.
To create an outstanding customer experience, the place to start is at the
point of contact. Servion helps analyze, define, and optimize contact at each
stage of customer interaction and helps enhance customer experience. Servion
enables organizations to reduce the GAP between customer expectation and
customer experience.
This is a consultative approach and generates an in-depth analysis that can
help organizations assess if they are indeed optimizing contact. The Contact
Optimization Model gives Servion the additional advantage of engaging with the
customer at a very early stage during the business cycle, work with the
customer to establish business requirements, and provide best-of-breed
solutions.
Are you done with the integration of 5by5? Is there any near-term plan for
further acquisitions either in India or elsewhere? If yes, what kind of a
target are you looking at?
Work on the integration of 5by5 is still in progress at the moment.
And, as far as the second question is concerned – we have not specifically
identified any company. But, if an opportunity comes up within our domain we
will look at it.
What is the contribution of top 5 and top 10 clients in the company's
revenues? How do you plan to broaden your customer base to avoid being
dependent on a few big clients?
Our top five customers account for about 35% of our revenues. Top ten around
50%. We are aggressively expanding into newer verticals and markets – and our
customer acquisition numbers bare testimony to that.
In terms of verticals, which are some of the key sectors for you? What is
the contribution of each sector in the company's turnover?
|
Verticals |
% share in revenues |
|
BFSI |
34% |
|
Telco |
14% |
|
TPCC/BPO |
13% |
|
Others |
12% |
|
IT |
8% |
Healthcare and Transportation account for 3% of our total revenues while
Government, Hospitality, Manufacturing and Utility contribute 2% each.
Automotive, Consumer Electronics, Education, Entertainment and FMCG account
for 1% each of the company’s revenues.
Tell us about the shareholding pattern in the company? How much is still with
the promoters? Who are the leading investors? Are you looking to tap the
primary market in India or abroad?
The promoters maintain a majority stake in the company. Consistent performance
and a steady growth rate have facilitated significant investments in the
company's equity from TDA Capital Partners.
What kind of volume growth do you expect in the remaining quarters of the year
and over the next few years? Is there any pressure on margins due to salary
hikes, competition, marketing expenses, etc.?
We expect to grow at 40% year on year. There is pressure on margins due to all
the factors mentioned. However, because of our specialist status we are able
to maintain our margins.
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