point
The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Managing Rapid Growth Business!!

Venkata Vadlamani
Wednesday, December 7, 2011
Venkata Vadlamani
Earlier this year, I came across the NASSCOM’s, "Indian IT-BPO industry – FY2011 Performance & future trends" data. According to this data, the IT services sector exhibited the fastest growth at 22.7 percent and projects a growth of 16-18 percent for software and services exports in 2012. With the benefit of additional market research, we can anticipate similar positive trends in other industry domains such as healthcare, financial services and manufacturing. It is clearly evident that most of the organizations that survived this past decade, have adopted rapid growth models to leverage favorable market conditions.

Interestingly, at the same time I became aware of the NASSCOM’s trend study, I received a call from a good friend of mine wanting to discuss about few business related issues. For starters, he was the CEO for a Healthcare Information Technologies Services firm with headquarters in U.S. and a few offshore facilities. His organization was recognized as one of the fastest growing companies in its market. Needless to say, he could very comfortably own a data point in the NASSCOM’s (positive) trend study mentioned above. During our subsequent meeting, he noted that a few years ago, his organization experienced a steep growth. Its revenues increased from $1.5 million to $8 million in three years; employee based increased from 30 to 115; and the Company opened new offices, so that they could be closer to their clients. The said company was also successful in capturing a few major contracts from well-known hospitals here in U.S. as well as from India.

To meet the increasing business needs, he borrowed against the line-of-credit to open outsourcing facilities in Hyderabad, hired 30 additional employees. Additionally, he set in motion, the process to identify and buyout two competitors in his market space. However, all of a sudden the "growth" ceased to exist and the financial curve took a nose dive. To compensate for the declining profits and as cost-cutting measures, he laid-off 65 percent of this employees, shut down few facilities and pulled the plug on few “promising” projects. Furthermore, employee morale was at its lowest leading to poor quality in client engagements and customer service. Lenders were knocking at his doors and he faced the likely-hood of filing for bankruptcy. As our discussion progressed, it became evident that although the ever-changing market dynamics played a role in his current situation, most of it could be attributed to bad management practices. His case was that of a rapid growth business model that was ill managed. At the end of our two hours meeting, we finally settled on a few actionable items for my friend to consider and to bring his company back into green.

Here are a few take-away points from that conversation that I would like to share with the readers.

Whether your company is a listed or a private enterprise, and especially when faced with a rapid growth model, you must operate with a simple strategy. A "simple strategy" is one that is Sustainable, Manageable, Scalable and simple enough that every employee in the organization can understand how it guides their daily responsibilities.


Share on Twitter
Share on LinkedIn
Share on facebook