Rohit Kapoor rushes into the boardroom with a warm smile on his face. The president and chief executive officer of EXLService Holdings, Inc., one of India’s first business process outsourcing (BPO) firms and the first to list on Nasdaq, is dressed in a light-coloured formal shirt, sans a tie, dark trousers and a smile that seldom goes away.
After a brief chat about voice recorders and portable video cameras, we get down to business. I ask Kapoor if, as a student in business school in the late 1980s, he ever thought that he would one day run a BPO giant with revenues of around Rs200 crore for the quarter ended June.
Spirited: While living in New York, Kapoor had a wine cellar with around 350 bottles of his favourite wines. Jayachandran / Mint
“In business school, I always wanted to do marketing, in fact,” Kapoor recalls. His plans started well enough. His summer internship was with Ponds India—a “marketing dream job”—and then he joined Nestle India.
“It was a good job to really learn marketing from the ground up,” says Kapoor. There was the mandatory rural stint that took him to rural Andhra Pradesh. He thinks just a moment before he recalls: “I went to Bellampalli...then Telangana district. Didn’t know a word of the language. Good times!”
A couple of years later, in the early 1990s, foreign banks began opening offices in India. And they were developing their own marketing teams. So the budding marketeer decided to move from Nestle to Bank of America’s fledgling India operations. Kapoor quickly adds: “Also, this was the time I was getting married. So my wife said: ‘Please earn some more money or you won’t be able to afford my lifestyle!’”
In hindsight, it would end up being quite a fortuitous move for Kapoor. At the time, Bank of America’s India country manager was Vikram Talwar. Kapoor’s association with Talwar would subsequently extend all the way to EXL, where Talwar is currently the chairman (and an ex-CEO).
I persist with Kapoor’s business school experience for a bit. “My ambition when I joined was to be an i-schol,” says Kapoor, referring to the handful of students who top the class and get industrial scholarships from various companies. He continues, “But I overshot a little and ended up coming rank 2 in first year.”
I ask Kapoor if, given that he was a topper “i-schol”, he always aspired to be a CEO from the get-go. “Not in those words. I always told myself that I wanted to be financially independent in 5-10 years or so. That was a goal. Otherwise I think I wanted to always just work at a career. I am not the sort of guy who sets up a goal, reaches it and then says ‘Okay! I am done.’”
Does this attitude—this need to never settle—extend to EXL as well? He says it does and explains with an example: “When we set up EXL, a big goal for us was to do a public offering. It happened in 2006. But we didn’t stop there, obviously. Today, we are one of only three publicly listed pure-play BPO companies based out of India. We are now No. 2 in terms of market cap. But none of these things are end goals. We still want to become bigger.”
And then, after a moment, he adds: “Also people. Especially in terms of people. I am quite happy that we have several employees with great résumés with us.”
After a couple of years with Bank of America here, it was time for a change of scene: “I got the opportunity to set up a new business for the bank based out of New York. I flew out end-1993.”
Kapoor went to set up the NRI business but two years later he decided it was time to set new goals. He was looking to move into private banking.
“I did a few private equity type of transactions at this point. Sometime around 1996-97. During that time, India had several IT services companies doing very well, but with quite low evaluations.”
“In one deal we put in $10 million in the beginning of the year. And at the end of the year, we came out with $80 million. We were like ‘Wow!’” Eventually, when Talwar and Kapoor got together to think of “things we could do on our own”, the IT sector was a top choice. “I saw these high networth individuals, saw how stupid they were but yet how much money they were making. I figured even I could run a business if I wanted to.”
Both entrepreneurs “concocted” several business plans, including ideas for a private bank and a non-banking finance company. Despite elaborate proposals and presentations, none of them got any funding.
“And then we decided we would set up a BPO just to handle the emails of dot-com companies like Amazon. Our thought process was this: It cost $3 to handle an email in the US. We’ll be able to process the same thing in India for $1. And we’d sell it to our customers for $2 per email.”
Then, in six months, Kapoor saw the “email processing” market crash. From $2 each, prices fell to just a few cents. Both partners decided to look at things in which they could add more value. Cue: an elaborate back-office processing company, a pioneering idea at the time. EXL was born in 1999.
The following decade would see Kapoor in a plethora of roles: everything from chief financial officer to head of marketing, company secretary and finally, in 2008, the CEO.
I ask him what has changed since his becoming chief executive: “More than anything else, it is that I now need to get to know people. I’ve set up a goal of knowing intimately the top 300 people in the company.” Kapoor says he’s already managed to cover around 200. He will cover the rest by the end of 2009.
“Sometimes, in my previous roles, I used to think that by, for example, sending an email out to people, everyone would automatically get my perspective and act on it. But now, as CEO, I meet some very intelligent people who don’t get the same perspective at all. That was an important lesson.”
So how is EXL a different company since Kapoor took over? He points out three factoids he recently heard: “First, I was told that half of all CEOs fail and leave in the first year. Second, ex-CFOs make terrible CEOs. And finally, externally groomed CEOs are better than internal ones. Unfortunately I had to discover all these things just after I took over!”
So far, however, the transition has been smooth and though the stock price has fallen since he took over, Kapoor believes the firm is in good shape. I ask Kapoor if he’d have stuck his neck out and moved in as CEO if he knew the economic slump was around the corner. The timing could surely have been better. Kapoor laughs: “Several analysts have asked me that. Did the old CEO want out knowing things were going to get bad and shove me in front?”
Kapoor goes on to explain that while things are difficult indeed, it is a good time to rethink business and prepare for the cycle to pick up. “Many companies will do badly. The smart ones will do well.”
Finally, I ask Kapoor if he’s achieved his initial goal with EXL: Is he in a position to cash out and retire rich? “Several times in the last 10 years we’ve had the chance to sell out. But we didn’t.” Kapoor explains that the top management wants to keep building the company. “Besides, we don’t need the money. We are quite liquid.”