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Way back in December 2003, we spotted a virgin opportunity. Though we weren’t the first ones to set up shop in this space, we were certainly the pioneers in the niche we operate in. Our idea was seductively simple – all analysts at the junior–middle management levels in banking and consulting companies globally, from New York to Tokyo, were spending 60-80% of their time doing desk-based research and analysis work, sitting in their expensive offices in prime locations. There was no reason why this work could not be done by intelligent and qualified people in India. So, we started providing customised research and analysis solutions for corporate and functional strategy formulation, M&As, business development, CRM and procurement restructuring.
Our customers include large global corporations, strategy consulting firms, investment banks and hedge funds, to name a few - mostly based in North America and Europe. As the downturn set in last year, our customer base suddenly found itself sitting in the middle of a gigantic economic mess. Our business took a hit. It’s not as if we have seen a contraction in business but just that growth has slowed down considerably.
We had a sense of things to come because the economic meltdown was very perceptible in the US. We have many clients in the financial services space and our ears were glued to the ground. We heard the rumblings and could guess what was coming. But even then, we could not assess the magnitude of what was coming!
The first reaction was to rejig our growth projections and assess the impact on the business in terms of growth, costs, cash flows, etc. We focused even more on UK, a market that typically lags behind the US by six months in everything, from a housing price decline to the length of hemlines. We knew that we had a six-eight month window before the UK followed the US into economic troubles. And we went hammer and tongs at this market.
Things, however, went from bad to worse. We had opened new sales offices in New York and Hong Kong just a few months before the murmurs were heard on the street. We could not yank out those business development investments without shooting ourselves in the foot. And neither could we wait for the investments to bear fruit over the long term. We decided to set a target date and watch the performance of these assets. Soon, we had to shut down our Hong Kong arm. We froze all hiring across the globe and slashed training budgets. Entertainment came down to bare essentials.
We subjected every element of cost to a microscopic scan. We asked our vendors to drop their margins. Our logic was simple: if we were in pain, then our vendors, who had benefited from us in the good years, would have to bear a part of that pain as well. The message of cost effectiveness was ingrained in our people. When the tide’s good, cost reduction is an unglamorous part of a CFO’s job. We made it fashionable all over again. We also made sure we did not do anything that was penny wise, pound foolish. We still had our parties and celebrated achievements.
We followed a simple and clear strategy – survive this period, at any cost. We ditched our year-long plans and began looking at every month strategically. This helped us react to any dip on an almost-real time basis. We no longer had the comfort of taking stock of a situation after a lag period.
Productivity became our key focus area. In our line of business, you save nickels and dimes by reducing overheads, such as travel and entertainment. But the real dollars are walking in and out of the door every day. A slight boost in productivity can do wonders to the business.
Luckily, we did not have to let go of any of our people due to lack of work. But some of the non-performers, especially at the senior level, were gently nudged out. In times like these, one cannot afford to carry any deadwood in the hope that it may spring to life one day. In fact, we’ve managed to take more people on board, though not as many as we had planned.
We’ve successfully managed to convert the threat of an economic downturn into an opportunity. Before the downturn hit us, we were ready to grow rapidly. That did not happen, but we managed to contain the damage. Our revenue hasn’t gone down. Instead of growth and acquisition strategies, we’re helping our clients survive this downturn. We now work on research related to reducing cost of operations, squeezing more out of supply chain, distressed companies, and so on. For instance, if our client imports milk from Europe, we figure out if the same can be done from Eastern Europe and in what time, including shipping.
We’re keeping a close watch on a month-to-month basis. The flow of bad news has reduced. We’ve got 60-odd clients. We hope to bring on board a few more people in the next few months. Maybe the silver line is beginning to emerge from the dark clouds!
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