At 40, Vinod Harith felt that he had been doing the same thing for years. He had worked as a copywriter in an ad agency, then in corporate and marketing communications in a host of companies that included Hyundai, Wipro and iGATE for nearly a decade and a half. His brother Pramod, 36, had been a marketing professional for more than a decade.
So, when the two decide that they would rather do something on their own, it is not a surprise that they chose to start a company that focussed on their strengths – marketing. Thus came into being CMO Axis in 2008, one of the early entrants into the marketing process outsourcing sectors.
“Like all start-ups,” says the soft-spoken and courteous Vinod as we meet in the coffee shop of a star hotel in Chennai, “you dig into your family for support. My wife helped out with finance while Pramod’s wife with HR. That is how we started, but now we have built a more professional team.”
The brothers invested Rs 15 lakh from their provident fund and savings into CMO Axis. “One thing we were clear about, we wanted to be profitable from day one and we have been,” says Vinod. How did they manage that? “Two rules we set for ourselves – we will be cash flow positive and we will be profitable. And, till date we have maintained that,” he adds.
As a rule…
The brothers decided that they would not take up any assignment without an advance. If people saw value in them, they might as well be prepared to put money on the table, was their logic. As a rule, says Vinod, they do not work with companies on a completely variable pay model. Typically, 70 per cent of the pay is fixed and the balance variable, explains Vinod.
He feels that marketing managers in companies run the risk of becoming project managers, as they run after different agencies for different aspects of the marketing function. Second, there is a shortage of qualified and quality marketing professionals.
That is what prompted Vinod and Pramod to venture on their own. Vinod says they looked at other functions that had been outsourced and realised that marketing too could be outsourced. Rather than manage the agencies that carried out marketing functions, the marketing head could outsource all those activities and concentrate on new initiatives and strategies. This would appeal to a company’s CEO too, as, instead of building a marketing team, the functions could be outsourced, scaled up or down as the need arose. Vinod says that when they approach companies, they do not focus on the cost savings aspects. Instead, their pitch is about flexibility and the ability to align marketing with business outcomes.
CMO Axis’ break came when it signed up Barry-Wehmiller’s Indian arm – an engineering services firm – as its first client. CMO Axis now boasts of 30 clients, including some of the top IT companies, a host of small and medium businesses. Last year, it earned about Rs 4 crore. Five years hence, Vinod confidently says, they will be a Rs 100-120 crore revenue company with 1,000 employees, against the 100 now.
Marketing teams are under pressure to cut costs. They are not able to add people the way they used to. They are not looking for more agencies to do their work. They are looking for a team that will come and work with them, just like an extension of their own team and deliver to programmes, says Vinod.
His biggest challenge? Manpower, says Vinod, without any hesitation. Getting the right kind of staff as the organisation grows is proving difficult. Also, he points out, some of the start-ups of the earlier generation – Infosys, for instance – became what they are because the top five-six people stayed around for more than 20 years and helped the founders grow the company.
It is now impossible to get employees, especially in the middle and senior management positions, to stick around for 10 years. “That is not there from a mindset point of view. Once we get those five or six people who are willing to stay with us for five-ten years, then we can grow,” says Vinod. This year, he hopes to end with revenues of over Rs 10 crore. Margins are healthy. He will look for external funding only when they achieve this year’s target, when he is confident of getting a better valuation for the company.