Overview
My overview each year seeks to provide a perspective of how our business transformed
during the year under review and how this translated into changed numbers.
The big message that I wish to communicate in this overview is that we did more of the
same: in a sense nothing changed and in some ways, we made specific changes with positive
projected outcomes.
The big factor that influenced our business during the last financial year is that our
largest market - USA - slowed. During the course of the year, the technology business
climate in USA was affected by a general slowdown, apprehensions that things would get
worse before they got better, ripples of global armed conflicts, the Cold War emerging and
the impending US elections. What transpired as a result is that CXO decisions got
staggered in most cases, some decisions were downsized and every technology company
encountered larger headwinds.
During such an environment, there was a strategic premium on how a company like ours
should respond. Having been through similar cycles in the past, the first strategic piece
that we brought to the table was a conviction that perhaps nothing needed to change. Your
management relooked its strategic clarity and concluded that this multi-year approach -
'Inch wide and mile deep' - was not only prudent for the moment but also for the
foreseeable future.
It would be relevant to explain what this positioning means for our company.
One, the positioning indicates that we will continually seek to be subject masters
of a limited space as opposed to building a competence supermarket. We have seen that
customers tend to trust specialists; the result is that engagements between these
customers and specialists usually transform from a transaction to a relationship; they
extend from one-off to multi-year; they extend from the sporadic to the continuous; they
extend from the addressal of a limited problem to a holistic responsibility; they extend
from a narrow project engagement to superior profitability.
Two, the positioning strengthens our brand in the eyes of the customer. The
customer is not only willing to treat us the service provider of first recall; the
customer is also willing to refer our services to other companies. In a number of cases,
the CXOs moving from one company to another carried memories of our smooth engagement and
provided us fresh assignments in the new companies they joined. We have no doubt that this
goodwill is the direct result of having selected to specialise.
Three, we believe that the decision to specialise has strengthened our positioning
and recall among prospective employees. Most employees seeking to take their careers ahead
join companies that operate like centres of excellence; in turn, such professionals see a
career in being respected and recognised as specialists (over generalists). In view of
this, our 'Inch wide, mile deep' positioning sends out a serious message that we will
select to do only specific kind of work that engages the highest intellectual capacity and
generates the highest corporate return.
During the year under review, a number of industry observers suggested that perhaps we
should play the price game and widen the basket of offerings to beat the slowdown.
We did nothing of the kind; we continued to believe that our brand recall was the
precious asset that had kept us in business through various slowdowns in the past and
would do so during this sectorial trough as well.
Why are we so convinced that what got us here will get us hither as well? The answer
lies in the signals that a frequent strategic change sends out to our stakeholders. One, a
strategic change during a brief downtrend sends out a message that perhaps we are
beginning to panic, a reality that is not designed to enhance stakeholder value. Two, a
strategic flip-flop indicates that perhaps we were not entirely sure of our earlier
approach, which does not speak well of our strategic maturity. Three, a strategic change
needs to be backed by additional spending in widening our talent bandwidth, eating into
margins just when we would need to spread the most in keeping our cash flows moving. Four,
a slowdown often exaggerates market challenges and any long-term strategic change based on
the experience of a few months always proves expensive and unnecessary over time.
This should not mean that Saksoft did nothing during the last financial year to
strengthen its business model. The management recognised that merely more of the same
would protect our strategic direction but it would get us vastly short - just 50% if I
have to offer a number - of our targeted revenues of USD 500 Million by 2030. The priority
of the day then was notjust to run quicker but run smarter.
The word 'smarter' needs to be explained. This does not indicate strategic short cuts
that could enhance revenues in the short run but affect our brand in the long term.
'Smarter' indicates a strategic discipline of what we will do and what we will not.
'Smarter' indicates that we will continue to work on complex mission- critical projects
around the conviction that in the future if we were not to work on the same, the customer
would miss our presence. 'Smarter' indicates continuing to invest in marquee customer
relationships that enhanced our profile and got us valuable references, widening our
customer spread. 'Smarter' means a sustained commitment to doing what we are best at,
graduating our capability into a competitive advantage.
The outcome of this strategic discipline proved reassuring during the last financial
year.
The company retained most of its customers in FY 23-24, sustaining a multi-year
engagement thread that we believe is most crucial.
The company generated around 10% of its revenue from new customers in line with its
established '90-10 revenue formula'.
The company protected its 'remuneration-plus' approach across employees, the suffix
standing for the ability to treat professionals with respect and creative freedom. The
result is that the higher one ascended in the managerial hierarchy, attrition declined;
even at the entry level, attrition was lower than in the previous years.
The company's senior management liberated me from my erstwhile role in managing the
business on a day-to- day basis so that I would be able to address the strategic
decisions; in turn, this liberated me from addressing the urgent to start addressing the
important.
The company right-balanced its vertical mix through the timely acquisition of Solveda,
a digital commerce company. This company has come with impeccable credentials; it has been
a partner of HCL Commerce and SalesForce offerings and will represent our business arrow
head with growing possibilities. By the close of the year under review, the company was
largely present in five distinctive verticals (Fintech, Transportation, Digital Commerce,
Hitech-media and Utilities, and Healthtech).
The company made a decisive change in the way it prospected new customers. All
acquisitions made by the company in the past - 'String of pearls' - were followed by the
company retaining their separate identities even as their profit and loss accounts were
consolidated with that of the parent company. However, there is a growing feeling that
perhaps this federal approach has run its course: the time has come for our eight
subsidiary companies to present a consolidated face to customers. The result was that the
company integrated its marketing interface around the 'Saksoft' brand and we expect that
this will enhance the confidence of prospective customers to engage.
The company deepened its governance commitment, emerging as carbon- neutral from June
2023 onwards following the purchase of carbon credits.
At Saksoft, we are attractively placed to deepen our niche positioning encircled by a
widening moat. The latter comprised the use of reusable components, competitive solutions
delivery, prudent use of artefacts, case studies and reference customers.
The company may have reported only a 14% increase in revenues during the last financial
year but during the coming year we expect a revenue rebound by 25% around protected
margins.
By returning the company to its projected growth trajectory, we expect to abbreviate
the impact of the downtrend on our revenues and stay headed towards our goal of achieving
USD 500 Million in revenues six years from now.
Aditya Krishna
Chairman and Managing Director