Sramana Mitra: Where in India is your operation?
David Schnitt: We are in Chennai. We also have a small development group in Mumbai.
SM: In building this business, where have you found the traction? How have you gone to market with this value proposition?
DS: There are some segments of the market that our service seem to appeal more than to others. Our average client is around $500 million in revenue, and they range from $10 million up to $7 billion in revenue. That is a pretty wide variation.
SM: How many clients do you service today?
DS: We have more than 70 clients over a huge range of industries. We do certainly concentrate on industries like manufacturing and distribution, retail, and hospitality. If you look at those industries, you see that their needs in terms of accounting are a lot more in terms of a percentage of revenue than an insurance company, for example.
If you look at a manufacturing company, they have a huge number of invoices they have to pay, a huge number of bills to send, a huge number of payments from their customers, and a huge payroll. In essence, they have a much higher cost structure. They are the ones who often come to us and say, “We want to be efficient. We want to save money.” Interestingly, if you compare us to a much larger outsourcer like Accenture, their customers are primarily focused on cost reduction. Outsourcers like to talk about the value they add, but the reality is that if you look at all the research reports, the primary goal of large companies is cost reduction. After that, they want other improvements as well. But since they spend so much in terms of sheer dollars, cost reduction is paramount to them. The primary goal of our clients is to get a better process. Cost reduction, while it is still important, is secondary to that primary goal. They realize that if they were to make these investments in technology and re-engineering to become efficient, it would have a negative ROI because they simply don’t have the scale. We operate with a very different model than you would find in larger outsourcing companies.
SM: How does the workflow work? Are you effectively an outsourcing operation that supports functions like invoice handling, payments, or collections for finance and accounting divisions?
DS: Yes. We have an “à la carte” menu of services. Clients can elect to use us for just one process or multiple processes. The most popular process clients buy is accounts payable, because it is generally a big pain and it is a non value–added activity. We essentially become the client’s AP department, and we execute those processes with a series of metrics we are going to perform. We will typically save them 50% of their current costs and provide them with state-of-the-art technology, give them much better timeliness in processing transactions, give them better visibility in real time, and give them time to focus on more important aspects of their business.