Being a listed firm has helped us in many ways. No doubt there are downsides. Virtually all our clients are listed firms. When I sit across the table with another listed firm, we tell our clients that we emphathize. We tell them we know what it means to have quarterly targets and we know what it means to plan for the long term and the responsibility towards investors.
When did you set up an outpost in India?
We came to India some three years ago. India is relatively a small part of our business. Revenue from India is about 2% of our overall business. But those figures severely understate the contribution of our Indian office. For example, we recently completed an assignment with a life insurance company in India. It is a joint venture (JV) with a company from the West and a group based in India. We did some cutting edge work for them. The life insurance JV is looking at outsourcing to a third party in India. The board, when they considered our proposals, had representatives from other regions. They were taken in by our project and mentioned that this is exactly the work we need in other regions, including the US. So, we’ll export the learnings we got in India to our other offices.
If you can make money here (in India), then you can make money anywhere. Most businesses that have diversified out of their core competence haven’t been successful. It is different (that) Virgin Group and Kingfisher Airlines (of the UB Group) in India have diversified businesses. Most businesses that have diversified out of their core competence haven’t been successful. Stay close to what you know.
So, do you think some of them will have to divest their airline business eventually?
The airline business is a very tough business. Why do most of the businessmen get into airlines? Most of them get into it for hubris. Businesses are supposed to make money at the end of the day. Airline business has huge variations in cost. It is very hard to hedge in the right way and at the right time. Even Southwest Airlines struggled in this downturn. Over a course of time, they did well in hedging. One quarter was difficult, but now they are back on track.
On telecom companies. Diamond has done work with all the major telecom companies in India. Do you see the game changing?
We had some role with all the big guys. The game is still on the consumer side, putting together a package that is a combination of (the) right price, features and packaging, and going after the right segment. Everybody knows on the product side (that) SMEs (small and medium enterprises) are a big opportunity that hasn’t been addressed yet. Folks haven’t figured out (how) to address SMEs. Telecom, for a long time, has been a growth industry in India. I started using SMS in India much before I started using SMS in the US. India innovated. It’s a different market. I often use my BlackBerry more often than I use computer. It is much cheaper than (a) computer and broadband.
What’s the next trigger in India for retail?
I think the deregulation of the sector is inevitable. The current protectionist point of view of protecting small retailers doesn’t really help. The small retailer has to protect him or herself. The cost competencies that the bigger retailer brings is enormous.