It’s important to pay well to get top talent: Arun Jain

Acknowledging that mid-tier IT firm Polaris Financial Technology (now called Virtusa-Polaris) couldn’t grow at par with larger rivals Infosys and Wipro, Arun Jain, Polaris Founder and former Chairman, says it was the choice of cheaper talent that is to blame for the company lagging behind.

In a freewheeling discussion, Jain told BusinessLine that somewhere down the line, while mid-tier IT services companies such as Polaris, Mindtree and Hexaware can rejoice at being able to survive through the years, they need to reflect upon why they could never grow to the size of TCS, Cognizant or Infosys.

“Our front-end was not as strong as Cognizant’s. Cognizant started from the US and had the mindset to hire the best talent from the US. Our model was to send people from India to sell in the US,” said Jain, who now runs the Intellect Design Arena, which was demerged from Polaris after the sellout of Polaris in 2015.

“We were not able to hire the half-a-million salary people. Now, in the products business, I’m hiring all those people. I’m paying people anywhere between 3/4 of a million and over a million. In the services business, I never paid that money. So, what I got was substandard people compared to what I get now,” Jain acknowledged.

Jain built Polaris from the scratch in 1993 to get to ₹2,500 crore in revenue in 2015 before selling a majority stake to US-based Virtusa. While at Virtusa, Jain built a products division called Intellect Design Arena, which he demerged from Polaris in December 2014.

“We need to reflect on why Polaris remained mid-tier. One reason was because we focused only on BFSI. But even in BFSI, although in 2002 we were the leaders for large deals, Cognizant and Infosys did a great job than what we could to ramp up. We also couldn’t enter many large deals because of the balance-sheet requirements those deals came with,” Jain said.

He said it is important to pay well to get top talent if a company needs to build a strong products portfolio, something that most IT service companies stayed away from doing for many years. Now, with margins rapidly declining, most companies are bullish on products and platforms.

“To do a product deal of $10 million, I need a person who has that kind of a stature, who can talk eye to eye to a CIO. If a CIO gets $750,000, he should get the same. Someone from India getting barely $200,000 and talking to a CIO, he can only have a parent-child conversation,” said.

With the focus now only on products, Jain is trying to fulfil what he couldn’t at Polaris, which is creating IT products that can help achieve faster-than-industry growth.

“Last year we grew 25 per cent,” Jain said, smiling after a long discussion over his regrets. “We are looking at sustained growth of 20-25 per cent for the next few years, and crossing ₹1,200 crore in revenue by March 2018 is our motto,” he said.

Intellect Design Arena had ₹600 crore in revenue for 2014-15 when it went public in December, 2014. It grew to ₹800 crore by 2015-16, and, according to Jain, the company now expects to cross ₹1,000 crore by 2016-17 and achieve its 1,200 crore target by March 2018.

Jain is now taking several measures to ensure that Intellect doesn’t stagnate like Polaris and is trying to change the culture completely at the 4,000-employee strong organisation.

He is dividing the company into smaller units of 200-500 employees each. Each of these units will have their own CEOs, who will get to manage different products as separate entities.

Each unit further gets divided into teams of six each and no one is allowed to use email for internal communications.

“We have 4,000 people currently. Within them, we have benzene teams as we’ve observed that six-people teams are the most efficient. It is the chemistry between people that matters to create new products,” Jain explained.

To compensate for emails, Intellect has developed its own Facebook-like social media platform for the company, called UnMail. “Email is a barrier to productivity because people start blaming each other on mail. In a room, people become transparent,” he pointed.

To further its drive towards innovation, Jain, who believes start-ups are more of a fad, believes they are still useful in terms of getting early access to the latest technologies without having to reinvent the wheel.

“We have partners in the NLP and AI space. We’ve partnered with a Canadian company, built by an ex-Microsoft person, called DbIQ. There are a few companies in London we are partnering with.

“We are integrating some companies and white labelling them. We take them to market under our brand and provide services,” Jain said.

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