When he arrived on the scene in March 2001, he found it all wrapped around the 5 ‘F’s. But Ganesh Natarajan relished the chance of using his 5F-theory once again. He avers that his ‘5-F’ theory can be used to tackle any business situation. The simple theory is read to mean Focus, Fast, Flexible, Friendly, and Fun.

Ganesh was the brand-new CEO appointed at Zensar Technologies, a decade-old company with the strong lineage of Fujitsu, Japan and the RPG Group, India, but perched precariously on the brink of an imminent paralysis. "Many from the senior management including the CEO had left and business strategy was impacted," says Sunil Kunte, COO, Zensar who at that time was heading the company. The slowdown in the global IT services market deepened the crisis.

For one, Zensar had some intrinsic strengths in the global IT services business. A listed company, it was already of a significant size, had the history of ‘never losing a single customer’, had a healthy geographic spread, ran ODCs for large clients, and became the world’s first company to get SEI CMM Level 5. But employee morale was sagging. Utilization rates were low at 52 %, operational loss of nearly Rs 1 crore in April-June 2001 quarter was incurred, growth rate had slowed down, and the dotcom bug had sapped some of its financial resources without commensurate returns. Therefore the business, solutions delivery, and marketing strategy required a radical rethink. A year and few months later, Zensar seems to have transformed itself to save the situation. A refocused business model, strengthening of verticals, identifying specific value propositions, bring about a cultural shift, and gathering a crack team of senior management professionals—are the parts that make up the Zensar story from the start of 2001.

Getting It Blue
The cornerstone of Zensar’s success in the past one year is its solutions blue-printing (SBP) approach. SBP has become the mantra at Zensar and Zensarians are univocal when asked about it. SBP is a method to build or re-use frameworks where the entire solution could be visually modeled, and the code generated and tested—all automatically. This helps the company develop solutions faster and cheaper. The timesaving is upto 30 % and cost-saving upto 50%, for most projects. Says Ganesh, " The SBP is giving Zensar a decisive edge when pitching for fresh development and migration projects". Says Aamod Wagh, VP and Head-Operations, EMEA, "We bagged one of the largest insurance companies through this approach. We have big wins in Japan, US, and Europe solely because of the SBP approach."

Primarily business architects who understand the workflows, the security issues, the KPIs, and the like make up the SBP. At this stage it helps Zensar show the client what business impact the solution would have by ‘talking’ their language. The technology layer is then overlaid depending upon what the platforms are and what technologies are best suited. SBPs help arrive at frameworks, which are partially completed applications. "A demonstration of such frameworks and the SBP helps us start off at a much higher level with the client organization," says Wagh.

Continues Wagh, " Interestingly, we haven’t spoken about technology at all and more than half the case is won". The impact of the SBP goes beyond the initial effect of winning over a customer to being able to complete the project sooner and at less cost—both very decisive parameters in winning a contract. Currently, there are over 25 SBPs ready and reusable in various verticals and business cases, reveals Dilip Ittyera, CTO, Zensar, and the originator of the SBP approach.

The Model
In terms of the sales strategy, the focus shifted from horizontal alignment across technology areas to vertical business areas. Further, the company decided to focus on few key verticals like retail, telecom, utilities, and BFSI. Business specialists with high levels of exposure lead the business in these segments. These are essentially sector experts rather than people with technical expertise. Says Wagh, " Everyone has a vertical focus but we have an inside-out view—ours is from within the sector, led by people who have spent several years in the industry". Further, with the SBP approach, the company has to go through far lesser number of design iterations and is able to provide proof-of-concept faster. Says Ganesh, " In the last one year itself, we have done over 50 pilots, which are now moving into the program management stage."

PeopleSar A culture transformation is visible at Zensar. Employee motivation levels are high. Zensarians talk of “feeling very much involved with the company”. Says Shridhar Sarlashkar, a software engineer, “ The company’s vision is very much clear now, the communication from the top management is clear. There is a lot of enthusiasm around.” Shridhar has been with the company for over seven years. The ‘bosses’ are very approachable say others. Says Rajat Ajmani, a software engineer, “ The culture has really become open…. I am free to walk into Ittyera’s (his boss) room anytime with any kind if issue”. Employees who deal directly with the client are specially empowered and trained. The 100 odd people who directly interface with the clients are called the “ The Power of Three.”  Some of the key HR Initiatives: Development of competency model across the levels in collaboration with Saville & Holdsworth Ltd (SHL). Institutionalizing the 360-degree feedback process based on the Managerial Competency profile developed by SHL Assessment of leadership potential through development centers for senior managers. Redefined Performance Management System Performance-related compensation Integrating HR systems and processes through PeopleSoft

The company added 34 new clients in the year 2001-2002. Key amongst them are UK-based United Utilities, Ingersoll Rand of Hong Kong; AskMe Enterprises, Global Payments, Hyperlink, American Insurance Group, and Credit Suisse Private Banking. Nearly 15 customers are $ 1 mn plus, and six are $ 3 mn plus. In the first quarter of 2002-03, 16 new customers were acquired. Says Ganesh, " This is the proof-of-concept for what we have been doing. Look at the new customer acquisitions and compare it with the median industry value of 8-10 per quarter".

The delivery strategy is a practice-based model with practices in the area of consulting, package implementation, application management, custom solutions, and program management. BPO will be added to the practice portfolio shortly. Offshore development continues to be the key focus area. In fact, Zensar has been one of the first Indian IT services companies in its league to really exploit the power of dedicated offshore development delivery centers. Says Parag K, equity analyst with Equicorp, " Zensar’s experience and maturity in handling work out of an ODC is a differentiating factor." Currently there are eight ODCs for Cisco, Transco, P&O Nedlloyd, and Sprint, each of them being multi-year contracts. The customer relationship is based on mutually shared metrics of fixed costs and shared risk. With each ODC customer a full ROI plan for on-going cost reductions on mutually agreed terms is worked out.

Another smart move by the company has been in the area of knowledge management. Zensar managed to brand its KM offering as "KM in 30 Days" and the move has fetched the company a good amount of visibility. Says Ganesh, " Both SBP and ‘KM in 30 Days’ have worked out well in terms of revenue traction." In this offering, the company makes and implements a KM pilot for its client within 30 days. A demonstration of the KM effect on business is therefore better appreciated. Says L Subramanyan, Head (Marketing and Strategy), Zensar, " We are the first ones to draw KM out of the esoteric and fuzzy conceptual framework and simplify it." Jahangir Kaizumi, Head KM, avers, "For the client, it is a very risk-free proposition. And most often we are able to demonstrate a strong case for KM."

While the company continued to reduce its dependence on the US, the epicenter of the IT services slowdown, it expanded operations to cover wider areas in Europe, Asia-Pacific, and Africa. Can China be far behind? Last year itself, Zensar formed a joint venture with Han Consulting, a company co-owned by the Legend Group. The JV christened HanZen has a development centre at Zhuhai in Mainland China. The Chinese connection is being leveraged by Zensar in making value propositions to its existing clientele in USA and Europe, who are interested in spreading their operations in China. Through its alliances with large global SI companies, Zensar has offered the attractive option of running ODCs for them in India, it being more cost-effective for them to use India as a development base. With software product companies too, Zensar has successfully exploited the ODC model with five such engagements.

Transformed as yet?
As part of its growth strategy, the company has been actively looking at acquisitions, strategic alliances, and tie-ups. The company’s entry into the BPO space is likely to be through acquisitions or joint ventures. Though the acquisitions bit has been talked about for quite sometime now, none have happened yet. Acquisitions have been planned for new market access also.

Says Ganesh, " We are actively looking at acquisitions in the $5 mn to $ 10 mn range". But for a listed company like Zensar, its visibility on the tech stocks roster is inadequate. Counters Subramanyan "We are a cash-rich and debt-free company. At a time when the stock markets tanked, we were doing P/E multiples of 29, today it is 22 P/E forward when the average is 15-20". Says Ganesh, " I would say that the business model is in place, the transformation is being seen, and results have begun to happen." Overall, the business model has been ‘fixed’, says Ganesh. Successive quarters have been better. From a 2000-2001 revenue of Rs 242.4 crore, the company fell to Rs 201.5 crore in 2001-2002. The company focused radically on manpower utilization rates and brought it up to 78%. Says Sunil Kunte, COO, "From an operations point of view, the meltdown brought in tremendous business focus. We were forced to improve our processes and went ruthless on operating expenses". At the same time, the company increased its expenses on sales, business development, and training. Says Subramanyan, "We have been able to create differentiators. We are getting to be known as a focused company that has got a solid point of view. SBP and ‘KM in 30 Days’—these messages make a lot of sense in today’s market, avers Subramanyan.

Easwardas Satyan