The Hindu Business Line : A model that works

It is difficult to describe B.V.R. Mohan Reddy as anything other than proper. From the meticulous way in which his staff fixed up the appointment for eWorld with him, to directions to the office, to the full 20 minutes Reddy spent, unasked, to giving a full round-up of recent happenings at Infotech Enterprises, of which he is Chairman and Managing Director, it was all evidence of preparedness. In the hustle and informality of today's IT industry, an hour we spent at Infotech Enterprises in Hyderabad last month was reminiscent of an old-world charm. Excerpts from the discussion with Reddy:

How are you logically extending your business into new areas?

What we have achieved so far is the pre-eminent position in the business of outsourcing engineering services. In terms of scale of single engagement we have no parallels in this country.

So therefore if I am in aerospace, it does not mean I will not move into other domains. For instance, if you make a good car once, you can make many more good cars. You have got the skill. That is what we have done. Now we know the whole business of outsourcing can be done in aerospace and that is the one in which we are trying to move forward.

In terms of allied activity, what dictated your foray into say, avionics or marine?

I have got a number of squares where I am not present for now. Opportunities are there. So I thought avionics is a great place. I grabbed the opportunity as a logical extension by getting the right people. I got the right man to set up the practice. Quickly he got 40 other people with him. So I have the practice running right now. The success of this company, however, depends on people, processes, tools, technology and training. Our ability to attract, retain, reward and retrain talent has been a big success factor.

The second success factor, borrowed from United Technology Corporation, is called ACE, accelerating competitive excellence. And what we do there is we not only put the process in place but also measure customer satisfaction. So it is not the quality alone that counts, if you want to be an ACE-certified site, you need to have high levels of customer satisfaction and employee satisfaction. We also have got good domain knowledge in terms of technology and we have good tools with us.

While the addressable market is fairly large for engineering services, will marquee names easily gravitate towards frontline Indian vendors?

It is not necessary. We are not a marquee name ourselves. But we can compete with them. Infotech Enterprises was on an aerospace company shortlist, among 12 vendors from around the world. Eight of them were from India and four from abroad. These four were foreign companies who would set up shop in India. Out of the 12, we were No.2 in the list. I don't know who is No.1, but we definitely did better than our Indian competitors.

Will a possible slowdown in the US affect revenues from your EMI (engineering, manufacturing, industrial) business, which has more annuity revenue streams?

I personally do not feel that it will in any way affect the outsourcing part of it. If at all it happens, it will increase the volume of outsourcing. But it will not slow down.

What kind of levers do you have to improve your operating margins?

First and foremost are the operational expenses. That is one lever that we operate on. We constantly strive for making ourselves more efficient, which will definitely reflect on productivity, in terms of bench time and how we manage the rest of the assets in the company. So these are the levers that go in and make sure that we have a better margin compared to the previous years. However, improvement in operational expenses is not something that can be done in one shot.

maverick@thehindu.co.in

More Stories on : Interview | Outsourcing | Airlines | Engineering

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