K Chandra, chairman and CEO, Mascon

An alumnus from the IIT Madras, batch of 1989, K Chandra started his career, after completing his MBA from Rutgers University, New York, in a non-IT setup-US-based ABB Lummus Crest-as a chemical process engineer. Over a period of two decades he became head of India and China strategy, and finally, managing director of ABB Lummus Crest's India operations. Then in the avtaar of vice chairman and managing director of Bharat Technologies, a management consultancy outfit, he was instrumental in the takeover of three sick companies, and their subsequent rehabilitation. Also, Chandra was one of the founders of Mascon Global. The company was going through bad times when Chandra joined it as chairman and CEO, and has since helped in getting Mascon out of the falling growth rates. Chandra spoke to Yograj Varma, Associate Editor, about how Mascon went through bad times, and how it is now on a firm growth path.

What went wrong in the past few years? While others have seen phenomenal growth, Mascon has been on the downslide since 2001-02.
We had a great time till 1999-00. Growth was phenomenal. And I guess because of such heady growth rates, we got into a state of irrational exuberance, and got blind sighted. While others were bringing their back-offices into India, Mascon was building the same in America. We were looking at near-shore with operations in Mexico. Also, at the same time, we tried moving into high end consulting, thanks to the Kellogg School of Management. Result: enormous overheads. I personally think that extraordinarily fast growth, without funding, is a very dangerous thing. Mascon planned to raise about $50 mn, no thanks to the meltdown, that could not happen. In retrospect, it seems that everything was against the company at that point. Mascon was hit, badly. It was a very difficult period-2001 to 2004, but, unlike a few others like Silverline, Mars, and DSQ, we not only survived but have rebuilt our team, and are now back in the race.

What's your current game plan?
I am seeking to build 'differentiation'. I am trying to follow a slightly different model that would give us an edge in five or six major areas where we can be a force to reckon with. Even today, while Indian IT might have moved from the Y2K days to AMO (application and maintenance offshoring), I think the play is still about labor arbitrage. Even the large companies which started out with body shopping have created collateral to show that they are basically on the high end of the value chain, but if you look at 90% of the business, again the rethink is back to labor arbitrage.

I think one company which is different is TCS because a lot of the work done there is in development space in defense, automobiles, etc. They are doing lot of work in India and, more importantly, they are delivering projects, which is far more difficult than doing an AMO labor arbitrage. And we have a similar strategy. If you look at our history, we would have delivered over thousand projects and have never been sued.

How different is it from the verticalization strategy being followed by almost all the companies?
It's both horizontal and vertical. We need to go up the value chain on the horizontal level, and we need to go up the organizational value chain if we are going vertical. Unless you understand the technology and the changes that are going to take place in technology, you can't make it. I personally feel that is where Mascon is today. At this point, we don't have a great deal of vertical capabilities, although Mascon was created on the discreet manufacturing platform. We are ramping up our capabilities in various verticals.

Which areas are you focusing on?
Our telecom practice is approximately 15%, and that is something which will grow. Within telecom, we work on embedded systems. Also, it is more on the R&D outsourcing side and not purely telecom. Next in line is embedded systems, where we are focusing on the automobile segment. Also, our traditional strength in discreet manufacturing will continue. The other area I am excited about is process.

For instance, if you look at a typical petrochemical refinery, it is a very complex set of algorithms that run the entire thing. It is one industry where IT support has not been the highest. Traditionally, a very conservative industry, which has never seen this kind of work. We are upbeat about the ramping capacities and capabilities in these areas.