Srinivas Balasubramanian: Outsourcing in a Global Economy

Music

Vince Thompson: Hi, I'm Vince Thompson. Welcome to Dog and Pony. Srinivas Balasubramanian, the Chairman and CEO of Photon Infotech, is taking his experience as a second time CEO and Indian entrepreneur to look at the global IT marketplace and take a company from 20 employees in 2004 to over 1,600 employees today -- outsourcing. On one side, lots of great arguments, it's inexpensive. We use the global workforce. We take advantage of the assets that are there. We repurpose, and we get things done sometimes faster and better, more efficiently. What do you have to say about it?

Srinivas Balasubramanian: So the business by itself is not a new business. The outsourcing business has been around since the '80s. I mean it's by no means a new business. And I keep saying that if you went out to the terrace of your roof and shouted out the word "outsourcer," you'll probably get 15 people walking in. So we don't look at ourselves as exclusively an outsourcer, but more as a domain specialist around these technology trends. So if you're looking for expertise around, say, mobile application development, building new location base services, building iPhone applications, which are on the cutting edge of technology, this is a global software solutions provider. And it's my firm belief that global software production will be a free market economy. Software will be built where it's more sensible to be built. Parts of it will be built in India. Parts of it will be built in the United States. Parts of it will be built in China. We intend to bring to our customers the value that each of these jobs and domains brings to the table.

Vince Thompson: So a venture-backed startup, to get some -- they have an idea. They get some money. Is this the time they call you?

Srinivas Balasubramanian: That's absolutely the perfect time for them to call us because we can make that money go a long way. We work with a host of venture-backed companies. That's actually a lot of our sweet spot because we understand these technology trends just very, very well. And we can help them build solutions and products, and make their dollars go a long way.

Vince Thompson: Are you trying to solve existing business problems? Are you trying to empower your customers to capitalize on new ideas and trends?

Srinivas Balasubramanian: It's a combination of both. In most cases, it's new applications that we built for our venture-backed and small and medium size businesses. It's normally putting a new concept to work. So it's almost always green field. For a lot of our larger customers, the Fortune 500s and the Global 2000s, in several cases it's a way to leverage their existing investments in technology. So if a small business called us and said they had a need to build, say, an e-commerce storefront or a web inaudible on a social networking site, we'd start with their means. So just technology solutions, consult with them, and come up with the best solution for their individual needs.

Vince Thompson: Where have you been wrong?

Srinivas Balasubramanian: We've been wrong several times. It's -- it's -- well, I did start a company before this. We were one of the leaders in the service oriented Architecture, Govern, and Space. But the business model in enterprise software just changed on us. And I could not build a profitable business out of it. The -- I was able to reasonably and successfully sell the company, and all my investors and employees ending up making money, but I would not say that the random exponential growth inaudible, just because the business undercurrents just changed.

Vince Thompson: Have you raised capital for this business?

Srinivas Balasubramanian: No. Photon has not had to raise capital at all. It's a profitable -- it's been a profitable business from the get-go. A little angel money, about $100,000.00 was raised up front in '99, but that was it. Ever since, it's been profitable from every month. And so the company has had no need to go and raise capital. So it's been bootstrapped and has run on its own.

Vince Thompson: What advice would you give the corporate executive who has some expertise in the field, and is watching this and saying, "Wow, I'd like to start a services, consulting oriented company."

Srinivas Balasubramanian: I think it's a great business to be in. For one, the consulting business, by its very nature, does not lose money. So unlike a software product business, or biotech venture, where you have to invest a lot up front, a consulting business provides you with an organic way to scale your business. Bu then again, it can only scale as fast as you -- as you place bodies. So it has its pros, and it has its cons. I mean there is no hockey stick, so to say. It's not that, you know, you produce one CD, and you sell, like, 10 million of it. So the consulting business, by its very nature, gives you some flexibility because it allows you to figure it out. The scaling model is more organic, so it becomes operational very quickly. It becomes an operational company very quickly once you look to scale it out. I would say, "Go for it," and hope you're very lucky.

Vince Thompson: Thank you so much. It's been a pleasure having you on Dog and Pony.

Srinivas Balasubramanian: Thank you, Vince. My pleasure.

Vince Thompson: And as always, if you have questions, comments, or ideas for guests, please email info@dogandpony.com. I'm Vince Thompson. Thanks for watching.

Music