Sramana Mitra: Where do you hire from in Chennai?
Venkat Viswathan In Chennai the two top universities are IIT Madras and Anna University. Those two universities are top on our list. We also work with the department of math and statistics at the University of Chennai. In addition to all of this, we have select universities in other parts of the country. Gilani is one of them. It is one of the campuses that attracts a very high quality of student, and we had large successes with them.
SM: I am surprised you haven’t mentioned ISI.
VV: This is how the science institutions are built in India. The Indian Statistical Institute is focused on fundamental research. They are very good at producing [methods]which are great for research as well as the numbers that they produce reflect their orientation. They have very small classes, and they are focused in this particular area. What we have found over time is for the effort we put in to build a relationship there, the returns are not large enough. While we do have ISI alumni in our team, we don’t focus on ISI as a big source of talent for us today. A lot of our work is applied math. It is not about trying to figure out number theory. It is not about the math. We have to go beyond the math and look at the business issues and business insights. What we found good were MBAs with a strong background in mathematics, like engineers, turned out to be a very good engagement for us. Engineers in India are very good at first-level data analysis, which is just number crunching and which essentially tells us what the map will tell us. But if you want to deliver business insights, you need to be able to translate this into a storyboard: “Here are three top reasons why Android as a platform is going to lose market share three years from now.” That is a story you will need to tell and back that up with data. You need to establish a hypothesis, and you need to be able to test it and prove it to the business leadership. If they think that it is credible, they will go on and make decisions based on it.
SM: You need to be able to understand business in order to be able to frame the problem with the data behind it. It is not just random data crunching.
VV: Absolutely. What we provide is a business lead solution. You need to be able to understand the domain of marketing.
SM: What is the size of the business analytics outsourcing market right now in India?
VV: Today’s size is somewhere between $250 million and $400 million.
SM: And who are the players?
VV: Genpact, which is the leader in this space, is probably the biggest player. They have been the pioneers in adapting a lot of the credit card processing as well as any kind of cognitive analysis. Interestingly enough, a lot of captive units in India do a lot of work for their multinational parents. You have American Express, Citigroup, HSBC – all of them have significant captive investments in India. A lot of the credit risk models and customer service models are [done there]. In the third-party provider space, other than Genpact, you have some of the BPO players who have acquired knowledge services players. You have EXL or WNS. Then you have pure-play players like Fractal Analytics, New Sigma, Advisual, and companies like us, that have part of a group of people who are primarily focused on these types of analytics.
SM: How is your assessment of how this industry grows through the next five to eight years? If it is a half-billion dollar industry right now, where do you see it going in 2020?
VV: I am very confident we are at an early stage of a big wave of innovation. This wave is still quite different from the previous waves in the perspective of our creating a new market. We are not replacing analysis that had already been done in one location for another location. Lots of times we are doing analysis that has never been done before anywhere in the world.
SM: I think there is a tremendous shortage in the U.S. or European systems of qualitative skill sets right now. I am talking about people who have technology and qualitative skills – analytical skills that are required to do this kind of analysis, especially in the domains of marketing and manufacturing, where these analytics have not happened as much before. I don’t think this is a displacement industry. It is more of a “make new jobs” industry.
VV: I agree. If you look at the scale of things, I believe we are at a very early stage. It is like in the early 1990s with IT services, where a handful of companies demonstrated that it was possible to do. Once it started getting capitalized and once it started attracting the right amount of talent needed for them to build international businesses, they took off in the early 2000s. I see this sector evolving in that way. In the next 10 years, we should see anywhere from a twenty-fold to a fifty-fold growth in this business. If it is half a billion to a billion today, I expect it to be between 15 billion and 20 billion in 10 years. If things pan out really well, it could be much bigger.