Virtusa Corporation: Millennial Enabling Business to be Successful in the Digital Age

Date:   Monday , October 06, 2014

Just as Generation Y is rapidly becoming a significant population of the global consumer base, businesses are leaving no stone unturned in understanding the new expectations of the Millennials, a generation of consumers that were born digital natives and expect to consume products and services predominantly through digital devices. Just look around you and you will quickly realize that every enterprise servicing consumers has a significant opportunity as a result of the inextricable link between digitally savvy consumers and the proliferation of digital devices in their possession. While many established businesses are still struggling to come to grips with changing market dynamics, be it newer and more challenging consumer expectations, or emerging technology that can be used to disrupt business models, Kris Canekeratne, one of the founders and the Chairman and CEO of Virtusa Corporation (NASDAQ: VRTU), a leading business consulting and IT outsourcing provider, has an elegant smile on his face as he sits in his New York City office excited about the opportunities ahead. The combination of an increasing percentage of digitally savvy consumers and advances in technology are enabling progressive enterprises and upstarts to disrupt status quo and introduce new products and services. Having provided business consulting and IT outsourcing services at the intersection of large enterprises and their customers, the Virtusa team foresaw this paradigm shift years ago and has diligently built an industry leading competency to help clients deliver a distinctive Millennial experience.

This shows in their earnings too. One of the fastest growing public companies in the global IT outsourcing industry, Virtusa\'s revenue for the first quarter of fiscal 2015 was $112.3 million, an increase of 24 percent year-over-year. Additionally, Virtusa has won numerous recognition from analysts and industry organizations including, ISG\'s Global Top 20 list of Outsourcing Service Providers, InformationWeek 500 list of Top Technology Innovators, and Forbes\'s 100 Best Public Companies In America with revenue less than $1billion. Through its cutting-edge, innovative approach to providing millennial solutions and services, Virtusa has attracted many of the top global businesses in large consumer facing industries. These industries are going through significant transformation driven by the rapidly increasing number of digital savvy consumers and employees and technology trends such as cloud, mobility, social networking and big data driving increased demand for a partner who understands how to develop and deliver digital solutions that connect with digitally savvy consumers and employees. Virtusa has a marquee set of clients including AIG Global Services, JPMorgan Chase Bank, N.A. (JPMC), British Telecommunications plc (BT), to name a few. All this is testament to the fact that the company has produced the right mix of solutions and services to address current and future market needs.

The Impact of the Millennials Consumer
We are at the cusp of a fundamental change in the market environment and the forces that drive business success. While the millennial generation is a catalyst, earlier generations have also adopted the \"millennial mindset,\" rapidly changing the dynamics of how consumers interact with service providers. At the same time, rapid advances in several disruptive technologies like Mobile, Social, Gamification, Big Data Analytics and Cloud, are enabling corporations to innovate and introduce new products and services at an unprecedented pace. Enterprises that do not leverage these technologies face a serious risk of losing market share or even becoming obsolete, creating competitive threats for some of today\'s best known brands.

Moreover, in a connected world, competition can emerge from the most unexpected places. The need for enterprises to accelerate innovation and introduce their products and services faster has never been greater. Corporations that embrace this paradigm shift have tremendous growth opportunities, while those that are slow to adopt can rapidly fall behind. Given this context, corporations are not only initiating large transformational programs to run their business as usual (BAU) activities efficiently, but are also focusing on innovating their business processes to deliver a Millennial experience to their customers. They are looking for strategic partners who can not only help them in this but can also make them agile to respond to competitive market environments. \"We are well positioned on the customer experience side, helping our clients deliver a distinctive Millennial experience to their consumers, and in supporting today\'s CXOs drive cost reduction through business transformation, to fund investments in business growth,\" says Virtusa\'s President, Raj Rajgopal. Virtusa has come up with very creative cost take out models that leverage its technology heritage and use its engineering mindset. It has developed a toolset that increases the productivity of software engineering teams, while shrinking the cost of testing, support and maintenance of IT application platforms. The firm has invested significantly in developing software. engineering frameworks that are unique and differentiated, which deliver 25-40 percent more productivity or help take out the cost from application support and maintenance, and software quality assurance (SQA). In short, Canekeratne says, \"On the one hand, we are enabling our clients expand their addressable market by delivering a distinctive Millennial experience and, on the other hand, we optimize operating costs and reduce business risk for our clients through a set of industry leading transformational solutions.\"

The Uber Factor

Virtusa, inspires its clients to disrupt their existing business processes and thereby the industries they operate in. Resolute in its belief that there is an Uber (the ridesharing service based out of San Francisco, that has revolutionized getting hold of a cab in over 60 cities across the world) -like opportunity in every large consumer oriented industry, Virtusa works with its clients to identify, seed and operationalize disruptive solutions and thereby grow their addressable markets. With the Uber app on your smartphone, as an example, you can hail a driver wherever you are, whenever you want, and receive smart and professional service right to your door, almost as good as having your own chauffeur on call. In a similar fashion, Virtusa is banking on its business consulting led industry expertise and technology expertise to help create a distinctive Millennial experience for their clients, helping these businesses expand revenue streams and maintain a leadership position in the markets they serve.

We are at the start of an era that will see the largest investment in application modernization in the history of IT. Much of this is driven by the increasing percentage of digitally savvy users who demand access 24x7 on their device of choice outfitted with apps that are rich with Social, Location and Mobile (SoLoMo) features and analytics that meld into a perfect and distinctive digital experience that is useful, usable and desirable. Anything short of this and Millennials will discard the lacking service and quickly adopt a new, more appealing one. And that is not all. All of their digital cohorts will move with them creating significant risk for service providers who do not quite understand the power vested in the hands of the new, digital consumer. While the front end user experience must adopt Mobile, Social and Big Data paradigms, major changes and transformation is required to the business architecture, processes & workflows, data models, content management, establishment of new roles and responsibilities, etc. � to ensure that companies can deliver to these expectations seamlessly and truly create value.\"At Virtusa, we have created solutions that creatively use a combination of these emerging technologies and provide a useful, useable and desirable customer experience, driving a paradigm shift for more progressive and transformational businesses,\" says Rajgopal.

Clearly, in some ways, this focus and ability to help corporations transform their business to be a Millennial enterprise is born from Virtusa\'s heritage and experience of transforming its clients\' customer facing processes. This is further enriched by Virtusa\'s social business engagement platform that provides a rich Millennial experience to its employee base. The Millennial culture is deep-rooted in the organization\'s DNA. Given that digital natives form over 70 percent of its workforce, Virtusa has been experimenting with disruptive technologies to make its organization a digital workplace. A case in point is its home-grown, award winning social business platform, V+, which provides a rich digital environment for its 8,500 plus global employees to work, learn, collaborate and innovate.

Virtusa has also helped some of its larger clients in transforming their IT infrastructure and creating a much simpler, much more efficient IT capability to service their businesses. One such partner is a leading global telecom player with whom Virtusa has been working with for the past several years. Their very successful relationship is a testament to Virtusa\'s ability to drive business transformation and innovation for its clients.

Birth of a Star

There is a confident and energetic aura in Virtusa\'s offices for the Millennial plans of the company, reminiscent of the early days in Virtusa\'s history, when the company was created to accelerate time to market through innovation. Incepted in 1996, the initial motive was to leverage a global talent pool focused on leveraging innovative solutions to accelerate business outcomes for its clients. Canekeratne, an accomplished software engineer himself, wanted to assemble global teams that could innovate and help clients accelerate their time-to-market, as opposed to spending time on mundane tasks. \"This led me to experiment with a small team of people both in the U.S. and in Southeast Asia to determine if we can leverage a global talent pool to innovate and help our clients bring their product and business ideas to market faster by applying Software Platforming efficiencies,\" says Canekeratne.

In its initial years, the company focused on fielding its Platforming value proposition in the outsourced product development (OPD) industry, helping independent software vendors design and build a unified software platform which would encapsulate their product idea and support different industries and applications. In the late nineties, software development was plagued by issues like coding inefficiencies, cost over-runs and delays in releases. Canekeratne\'s view when founding Virtusa, was to apply the notion of platforms to software development. This is an area that he is passionate about, has deep expertise in and often exemplifies through lessons learned from established industries such as manufacturing and automotive. By using its enhanced global delivery model, innovative Software Platforming approach and industry expertise, the firm started providing high-value IT services that enabled clients to enhance business performance, accelerate time-to-market, increase productivity, reduce cost of ownership and improve customer service.

During the early years, Virtusa proved that global teams can apply the principles of Software Platforming to greatly improve software product development efficiencies and then set its sights on bringing these same efficiencies to larger Global 2000 enterprises. Today, Virtusa serves some of the largest enterprises in Banking, Financial Services, Insurance, Healthcare, Communications, Media, and Technology industries through its technology centers in the U.S., Europe, India, Sri Lanka and Singapore.

Platforming Approach - Building the Differentiated Enterprise

Virtusa\'s Platforming strategy is apt for Global 2000 organizations, especially those that have large enterprise IT estates often replicating core business processes across redundant application stovepipes. As a result of years of business growth through market expansions, mergers & acquisitions, today\'s enterprise IT estate consists of legacy systems alongside new technology. For example, the CIO of a large telecom company, which may have hundreds of billing systems, has a significant untapped opportunity to move core billing services to a single unified billing platform - One Process, One Platform. It is not rocket science to see that 90 percent of the billing systems have common functionality. The choice before the CIO is whether to continue managing silo-ed applications or build a billing platform, which performs all common billing tasks. By rationalizing, standardizing and reducing technology waste, the CIO can impact the enterprise bottom line and enhance the organization\'s agility, and therefore, its competitive advantage.

Today, Virtusa has established itself as a big player in the global IT outsourcing industry. \"It is a trillion dollar industry and a very mature one. While global IT spend continues to grow at a healthy rate, the fastest growing segment is the offshoring component of the Global IT outsourcing market. We operate with one of the most optimal global delivery models in our industry and, in this context, I really want to underscore the fact that our focus has always been on delivering business value to our clients, as opposed to just helping them reduce costs through an arbitrage driven outsourcing model. We do this by understanding the business problem that the CXO is trying to solve, applying our business consulting expertise to develop a solution roadmap and using our deep domain skills and Software Platforming expertise to execute innovative solutions that deliver high impact value to our clients in areas like accelerating time to market, improving operational efficiencies, and enhancing the customer experience,\" says Rajgopal. Virtusa thus helps its clients consolidate, transform, and modernize their enterprise system through innovation so that it can create a much better, simpler IT environment and thereby much better business environment for its clients and their customers.

Virtusa\'s Platforming approach addresses some of the toughest challenges faced by CIOs, i.e. to use IT to support greater business agility and develop innovative solutions while reducing total cost of ownership (TCO). It also takes IT efficiency to the next level, well beyond traditional IT offshoring. Virtusa\'s Software Platforming approach enables enterprises to rationalize and consolidate technology assets into Organization Specific Platforms (OSPs) that are leveraged across the enterprise to support decision making with common services and a unified view of the business.

This approach helps to reduce immediate and downstream software development costs and maintenance, thus lowering the total cost of ownership. These are efficiencies gained from software reuse and reduced cost of current and future development. IT consolidation helps decrease long-term deployment and maintenance costs and comes in handy in releasing valuable IT resources from the inefficiency of reinventing common technology services every time, and maintaining redundant code over its useful life. The value proposition of Platforming also goes well beyond cost savings, allowing organizations to accelerate revenue generation through agile introduction of new products and services.

Platforming is practiced both as a science and an art at Virtusa. The theory of Platforming is embodied in Virtusa\'s well-defined software development life cycle and strictly enforced by an automated set of processes and tools that provide transparent access to all aspects of design, code generation, testing and deployment to its employees and client stakeholders. The firm\'s Platforming methodology is built on conducting top-down analysis to understand the clients\' unique business requirements, conducting parallel bottom-up analysis to explore existing technology assets, business logic, design patterns and then a strong edict for designing, building and leveraging reusable frameworks. It is also designed to consolidate common and overlapping technology process elements and leverage the platform\'s asset base to build solutions across the client\'s business environment.

Virtusa: The Go-To Firm

So essentially, in this highly dynamic and competitive environment, one of the key challenges for enterprises embarking on business transformation initiatives is choosing the right outsourcing partner. Although the majority of significant offshore deals are still captured by large market players, there is a shift in the client mindset now favoring mid-sized market players who can provide significant and differentiated value beyond that of traditional vendors. Client organizations are looking for mid-size global vendors who can bring flexibility, agility and business alignment, combined with optimum cost and delivery options; this is where Virtusa shines the brightest.

Application development and release cycles are shrinking by the minute; traditional outsourcing delivery models are failing to deliver the right kind of value; rapidly changing consumer expectations and pose higher risks to the business. To successfully navigate the complex and demanding market conditions and successfully.

\"Millennial enable\" their businesses, clients today need a strategic partner who brings thought leadership, innovation, and a combination of consulting and engineering rigor to the table, and can collaborate with the client to solve for today\'s and tomorrow\'s problems. Scale alone is no longer the only factor under consideration when sourcing suppliers for engagements, and midsized vendors will be playing a key role in the future of Millennial services. Virtusa, which is heavily focused on driving innovation for clients by engaging with them to help design, develop, and deliver new products and services, is the go-to firm for clients now and in the years to come.
Millennial is not about age, but the age we live in! Virtusa\'s young software engineers are proving this point day in and day out, by helping their clients deliver a distinctive Millennial experience!

Getting to Know Virtusa\'s Leaders

Kris Canekeratne, CEO & Chairman

Kris Canekeratne is one of the co-founders and has served as chairman of the board ofdirectors from Virtusa\'s inception and CEO from 1996 to 1997 and from 2000 to the presentAs CEO, he plays a key role in defining the company strategy and using technology and innovation continuously to maintain its leadership in the industry. In 1997, Canekeratne co-founded eDocs, Inc., a provider of electronic account management and customer care, later acquired by Oracle Corporation. In 1989, he was one of the founding team members of INSCI Corporation, a supplier of digital document repositories and integrated output management products and services and served as its senior vice president from 1992 to 1996. Canekeratne obtained his B.S. in Computer Science from Syracuse University.

Raj Rajgopal President - Business Development and Client Services.

Raj Rajgopal has served as the executive vice president, business development and client services since October 2008 and prior to his promotion served as general manager of communications, content and technology business unit when he joined in April 2005. Prior to joining, from 2003 to April 2005, Rajgopal served as President, Rajgopal Management Consulting, a consulting company, which provided consulting services to us from time to time from January 2004 to March 2005. Rajgopal graduated from the Indian Institute of Technology with a B.S. in Mechanical Engineering, earned his M.S. in Industrial Engineering and Operations Research and in Computer Science from Virginia Tech and earned his Masters in Business Administration from Massachusetts Institute of Technology (M.I.T.), Sloan School of Management.