UST: Getting Ready to Script a Billion-Dollar Dream
Date: Tuesday , March 09, 2010
Sajan Pillai’s office is bustling with activity. As the CEO of UST Global, one of the prominent IT services firms, his agenda and vision today are one and the same. He wants to break the siege of the IT industry by the giants and make it a $1 billion enterprise in the next two years with a client base of 100 or less. The man who believes in ‘Dream big, dream of excellence’ has made grandeur a convention in his plans.
This bold vision could be a little intriguing considering the fact that though the IT services market, both in India and the US, is a very crowded one with more than about 1,000 software companies in India alone, only five of these companies today earn annual revenues in excess of $1 billion each. Among the rest are a multitude of mid-tier companies such as Patni, Polaris, Hexaware, and even Mastek that are struggling to reach the mark, leave alone crossing it. In the case of Infosys, which is among the elite five, it took 23 years and a clientele of above 350 to reach the mark in 2004. The case with TCS or Wipro is no different.
But Pillai is quick to read your mind. He defies the conventional mode and breaks the norm when he says, “In an industry where everyone does the same kind of work and works on the same model, what differentiates - and will continue to differentiate in future - is the way you manage your client. Client management is the key to the success of any services company.” This is exactly how he is positioning UST today. With a client base of over 50 Fortune 500 companies in verticals like retail, manufacturing, transportation, logistics, media, and entertainment, UST is today redefining customer relationship. No wonder, many of its clients remain engaged with the company successfully for the last 10 years. With a simple mantra, ‘fewer Clients, more Attention’ the company is in a growth trajectory and has grown at a rate of 20 percent year-on-year compared to the industry growth of 8 to 9 percent last year.
Towards the Billion Dollar Dream
Unlike most IT companies that stepped into the services bandwagon in the late ’80s, UST, founded in 1998, has been a late entrant. Nevertheless the company caught up with most biggies in the industry by providing a gamut of services, which extends from Enterprise Application Services (CRM, ERP, e-Procurement, and SCM) to e-business solutions to a large number of Fortune 500 companies in many verticals. Traditionally, businesses relied on technology and product innovation for competitive advantage. However, as products became commodities due to global competition and relentless technological advances, the battle for differentiation and customer value creation shifted to customer intimacy and service. A reputation of superior service has proven to be a valuable differentiator in the industry. Hence the company believes that quality is not just about operational efficiency, and it is built upon people, relationships, and skills.
Recently UST won two major deals, one from world's largest retailer and another from Virgin Racing. Virgin announced that it had selected UST Global as its IT Services partner for 2010 Formula One season. Virgin Racing is a new team for a new era of Formula One. UST Global will collaborate with Virgin Racing on advanced technical projects as part of this operational partnership. On the cards for 2010 is a bespoke race management tool that will provide race engineers a 360 degree trackside perspective of each Grand Prix. This is made possible by integrating information streams from the FIA and FOM with the GPS positioning of the Virgin Racing cars plus FOM visual feeds to enable an optimal race strategy. UST Global will also integrate the Wirth Research simulator for the VR-01 to ensure a constant two-way correlation between both sets of inputs.
In the bid for the retail deal, in which all the major outsourcing companies participated, what set UST apart is their competency in various processes and its execution skills. While this could help expand the penetration of UST further in the retail space, this also gives a sneak preview into how the company is growing to achieve its billion dollar dream. “What customers need today are IT vendors that can be a one stop shop for their requirements and at the same time give them special attention for every little need that they have. They are trying to discover opportunities in developing economies and looking for partners that can help them in these countries. This is what we have been offering since the early days and thus we find today’s scenario completely optimistic and in our stride. We are not offering a lifetime agreement with a customer but what we can guarantee them is a lifetime ability and stability to learn, develop, and create a foundation for a future,” says Pillai.
The US President Obama’s health plan has generated a lot of opportunities in the healthcare sector and UST is looking at investing heavily in R&D in both media and entertainment and healthcare. Other verticals that they have expanded into, in addition to manufacturing, are transportation and logistics, and also the utility sector, which is an extremely interesting place to be both in North America and the UK markets. The company realizes that in any vertical or domain customers all over expect a deeper engagement, commitment, and more involvement from their IT vendors today. “They want a return on their investment and with the options in the services market increasing day by day, it is up to the IT services companies to differentiate themselves with their value add,” says Krishna Prasad, Global Head, Delivery, UST. Contrary to its competitors like Infosys, Cognizant, or TCS, who are more transaction focused — getting large deals from clients and increasing the client count by the hundreds — UST emphasizes on making large investments on select clients and increasing the breadth of the business with them.
Customer is Top Priority
Focusing on fewer clients is never an easy task, considering the fact that the revenue takes a deep down slide if even one customer decides to step out. However, Pillai takes pride in the fact that even during the about two years of economic slump, UST did not lose any major client. Though a few had temporarily ceased their business, they are now back with UST.
The foundation of UST’s business success lies in the customer centric culture within the company. The company promotes a culture of consensus and not one of consequences; hence it does not believe in signing unrealistic deals. Since inception, every associate is instilled with the values and culture the company stands for, and they are tuned to the fact that it is beyond the contracts that relationships are built.
This is perhaps the reason why Pillai could be confident with clients who come to evaluate their company before signing on the dotted line. He asks them to pick at random 15 to 20 people at their development centers and speak to them about the company before striking the deal. “Let us drop the contract if they tell you something different from what we’ve said,” he bets.
The openness and transparency in every business process ensure that both UST’s employees (or USsociates as the company addresses them) and the customers are aware of what is happening at every step. Unlike most organizations where there is a separate team to cater to customer queries alone, every employee in UST is encouraged to mingle with the customers and support them irrespective of their role in the organization. Also, every USsociate is encouraged to suggest ideas that he or she thinks may add value to the company or to the customer’s business. The company has set up an innovation forum and lab wherein an associate can submit his or her ideas, which, after validating its practical application, would be used in improving the business process.
“The absence of a set hierarchy encourages our employees to communicate, collaborate, and co-operate with each other. Even when customers visit us, we encourage them to meet each and every employee of ours and this has been impressive as far as customers are concerned,” explains Pillai.
What also has impressed the customers in the past is the dedication; the effort the company takes to understand the customer’s business. At UST, people are focused on each and every one of the clients and the company takes a lot of effort to educate the USsociates about the client environment, the vertical in which the client is doing business, and other aspects of its business. . "Our model is not a black box model. We make sure that everyone in the team interacts with the clients before working on the project," says Arun Narayanan, COO. About 7 years ago, to help train its USsociates about each client, the company developed Client University - essentially a SharePoint based knowledge management and training system. Every client that UST engages with gets a Client University that contains all the information about the customer systems, about the customer industry, case studies, and online courses for specific industry certifications such as retail, healthcare, and the financial services sector. The concept of Client University has also been much appreciated by the customers. There have been instances such as when a large healthcare client used UST’s Client University to train its own new employees.
Today, when the business landscape is undergoing a change, with customers forcing IT vendors re-consider their business models, UST has an edge over others by having written the rules of the game much earlier.
Commitment Beyond Contract
In order to serve its customers better, the company has set up a unique three point client intimacy model that ensures that the business runs smoothly and customers do not get an opportunity to complain. Going by the company’s culture, every employee or USsociate is responsible for the customer health and happiness; but from the business management perspective, the organizational structure is also designed to ensure commitment and intimacy with the client. There are three people accountable for a single customer - a global relationship manager and two account directors. The global relationship manager not only helps form a good rapport with the customers within the office but also helps take the relationship beyond the office premises.
One of the account directors is placed in the client site and the other in the UST premise. The senior among the two is responsible for delivery and related snags at the UST front. They are also responsible for making sure that the entire team is following the standard processes and report to the global relationship managers. Thus, in case there is a problem, the global relationship manager, along with the account directors, handles the responsibility of the business relationship and the delivery of client engagements.
“Having multiple people per customer makes sure nothing goes amiss. Secondly, in the absence of a global relationship manager or an account director, there are two other people on the client account who know the client, the industry, and are abreast of the development going on within the account, thus ensuring fool-proof customer engagement in case of a catastrophe,” says Murali Gopalan, Joint CIO and SVP, UST.
Another unique model that UST practices is ‘man-at-service model’, which states that UST is completely responsible for the outcome of a deliverable as opposed to just providing resources to the client for managing the outcome or deliverable. The company also proves its commitment towards its customers from the fact that they are highly flexible around the contract they sign with a customer. “At the end of the day we believe that our customer is the king. We want to make sure that a client does not have to go back to their contract every time to see what is doable and what is not from our end. If a client requires an additional service that is not mentioned in the contract, we do not charge extra or go back and alter the contract again and again. We want to make sure we have a mutually beneficial relationship,” explains Pillai.
Such an engagement beyond business has earned the trust of customers, leading the way to several strategic partnerships. Recently UST formed a joint venture with a very large US based manufacturer, which was once the company’s client. “We worked with the client for a long time, and pleased with our performance they extended an opportunity to form a joint venture. Initially, we bought a piece in their business, which we now support too,” explains Narayanan.
Expanding the Horizon
“UST was started with a vision of transforming lives and not just for growing the toplines and bottomlines of the company,” says Dan Gupta, Chairman of UST, about the company’s foundation. “We started the company with a good vision and our focus was to create an environment that is free of fear and encourages open communication. At the end of the day, all that we want is to provide quality work and see a happy customer,” he adds. For Gupta, it is all about forging an everlasting relationship and going beyond the last mile with the customers. It is this idea of extending the relationship and forging partnerships that led UST to venture into consulting and BPO segments.
According to Lawrence I Lerner, Head of Consulting, UST, "Consulting is a natural extension of our service offerings. Clients that have placed their trust in UST as the delivery vehicle for their business needs can now look to us for strategy through execution."
Rather than talking theory and over-analyzing the marketplace, the company decided to jump right in with a ‘fast launch’ of its business consulting services. The acceptance of those services within the existing and prospective client base has been nothing short of impressive. Consulting services were launched in 2008 as a new group within the existing Strategy and Services division, augmenting UST Global’s already strong growth. The Consulting Services group has generated several new clients by delivering the higher-value services that enterprises are now demanding from their providers in the face of the continuing challenges brought about by the recessionary market conditions since 2008.
The UST Consulting team consists of a solid core group of experienced practitioners who focus on straightforward and honest advice based on analytic rigor and detail. The team comprises of hands-on practitioners - experts with strong business and technical background who are also open and objective.
The foray into BPO also was an extension of the existing clients outsourcing more work. One of its existing clients, a top mortgage lender in the US, has been steadily growing their government lending division and wanted to ensure that there was proper quality control oversight for both loan origination and loan servicing. They were searching for a third-party BPO partner that would provide expertise in government lending, leading practices in mortgage quality control, and arm's-length objectivity. They also wanted a partner who could provide transactional pricing which would allow them to scale their operation without staffing a department for peak volumes or risk understaffing such an important function. It was essential for them to keep costs contained at a time when loan volumes have been unpredictable.
With these criteria in mind, the client investigated several BPO providers and selected UST Global. The client wanted a partner with deep industry experience that really understood the criticality of the quality control process to their success,” says Prasad. “Though we did not have experience in the client’s BPO segment, the client had the confidence in UST's ability to deliver and the discipline to meet this challenge, and we were able to demonstrate that," he adds.
The Strong Leadership
Though an ambitious idea, one cannot help but believe in Pillai’s billion-dollar dream for UST, once you get a close look at his strategies. While on one hand he is aiming at strong customer relationships, on the other he has also been building a strong leadership system by bringing together several leaders from related industries in the past two years. Some of the key people who today are a part of UST include, Joe Nalkara, President, Mike Zerkel, Senior VP – Global Sales, Debra Anderson, VP HR – Niketh Sundar, ex-CIO of Novell, Robert Dutile, former GM, Technology, Reebok, Marsha Blakeslee, former Vice President and Chief Technology Officer of a retail major, Paul Madarasz, former President of AIG technology, and most recently Stephanie Moore, VP and Senior Analyst from Forrester. “We have brought in several industry leaders at this pivotal time, as we experience incredible growth and prepare to take the company to the next level. Their in-depth understanding of Global 1000 enterprise needs in the current economic environment makes them ideally suited to help UST clients weather the challenges they face. Moreover, they embody the values and culture of UST and act as the perfect ambassadors for our brand," says Pillai.
Business Opportunities Ahead
Till date, the company has had its footprints in just a few key verticals such as retail, manufacturing, transportation, logistics, media, and entertainment. But as it is often said ‘Recession is nothing but a pool of opportunities’, and the economic downturn has made UST look at new businesses and technologies. “In the current times, customers have so much data that they want their vendors use it in a meaningful way such as in business intelligence tools and technologies and systems to improve their business day by day. By the looks of our customer’s needs, we are looking forward to a massive demand for better data management and better business intelligence techniques and services,” says Stephanie Moore, Chief Marketing Officer, UST Global.
A former senior analyst with Forrester specializing in outsourcing and offshoring, Moore sees a massive shift in the service model practiced in this space. Customers not only want their vendors take care of delivery but also take responsibility for it. Though this has been practiced for some time now, a client-vendor engagement is giving way to a more strategic managed service relationship. Another trend she observes is the fact that the customers are looking for outsourcing support from more than one location. Going by the customer demands, the company recently opened development centers in Chile and Philippines. "At every step in our growth, as UST Global sets up operations across the world and embraces many cultures, we seek out and try to attract talents who personifies UST Global Values—Humility, Humanity & Integrity. Once we have the right people in the right place, processes, performance and profits are a given," says Alexander Varghese, Country Head for India, UST.
Pillai and his team today are thinking on the same lines, where UST manages its clients in such a way that each client eventually grows to become a business unit with its own infrastructure and leadership. While the leading services players like Infosys, Wipro, and TCS continue to hold on to a bucket of clients in the same vertical, UST plans to create a leader out of the few but all the clients it has. “When we started our business a decade back, we decided to run a meaningful business as opposed to just trying to gain more customers and more logos to our kitty. Today, we continue to follow the same path with a focus on adapting ourselves to the changing market and technology needs,” says Gupta.
To sustain the growth trajectory, implementing operational methodologies to measure and improve the processes, standards, and business models are imperative. This helps in building the core competence. To this end, the visionaries of UST Global have developed a framework that identifies the competency level of the employees and helps them use it in a more productive manner. The framework approaches the employees from different levels. But the basic idea stemmed out of a belief that 50 percent of what makes people effective is their behavior. The framework also benefits the customer because when he selects the resources for his engagement, the framework tells the customer which employee stands close to his expectations. The assessment through the framework is mandatory for every employee at UST Global. The framework is built around behavioral traits and other core issues like humility, client relationships, innovativeness, risk taking, and idea generation. It starts asking a simple question to the employees like ‘are you aware of the values’ and then moves on to ‘do you practice and promote them.’ Adequate training and coaching are given by experts and not by trainers. The Handprint framework is integrated with all the organizational processes in the company.
Building competency is impossible without focus on innovation. At UST Global, the founders have strived to build a system where innovation is the norm. To encourage this culture, the management has put up four different methods - setting up of a Physical Innovation Gym, Virtual Innovation Space, Open Minds, and Eureka Idea Management System. The inclination towards innovation is encouraged by portals for technical collaboration, blogging, tech discussion forums, wikis, and access through an Intranet form the core of innovation management. “We approach innovation in a democratic fashion to ensure the participation of every single employee. Hence, many such ideas that found their seed in the innovation space are being formally implemented,” says Gopalan.
The company's vision of transforming lives extends not only to its clients but also to people both inside the company and the communities in the geographies they operate in. ‘Colors’ is a strategic framework that helps achieve UST Global corporate goals by means of participative management and USsociate empowerment. Arun Narayanan, the mastermind behind the concept says “The idea was to conceive a program which allows one to move out of the daily office work and contribute to the company’s vision in an area different from what you do everyday. There are seven colors with different significance, for instance, a person under purple will indulger in activities that allows people friendliness”. The framework facilitates process improvement and organization building through people empowerment based on the fact that each USsociate has the ability to contribute towards specific areas, beyond what the job function naturally stipulates. "Colors is a platform for an individual to improve and become an expert in a key area of interest. The employees can also create value addition through cross-functional participation. It is a powerful tool for enterprise-wide communication and inspiration, while it also plays a role in organizational growth," says Mary Johnson, Director – Corporate Social Responsibility, UST.
Pillai’s billion-dollar dream neither seems far-fetched nor impossible. He has played his cards well and has planned well for the journey to the top. With veterans at the helm and committed USsociates and well satisfied customers, UST has not only created a niche in the IT services market, but has also silently led itself to the forefront among the mid-tier players. With the economy reviving after a long slump, markets are opening up. Pillai is optimistic about rapid growth in the first quarter of 2010 and of UST being bullish on the market for the next two years. Walking by the ideals set by his predecessors, it is just a matter of time before we see UST realize his billion-dollar dream and etch its name in the history of global IT services.