Mr. Deepak Ghaisas
CEO (India operations) and CFO, i-flex Solutions Limited
 
Good morning and thanks Dharen. We started looking at Indian IT industry and one of the things that many people ask is this question is what is so special about Indian IT industry and what it brings to the table? And why it is so? In a lighter way I give the credit of success of Indian IT to three people. One is the unknown Indian scientist who invented zero because the entire competent industry is based on the binary, and therefore if India invented zero then half of software royalties should come to India. Second is Columbus because he invented the market for us. And even today 82% of exports from the IT industry are from India to US. And the third one is the British, who ruled this country for 150n years and taught us English, because that is one of the unique point of strength for IT industry. I think that Chinese must wonder why Britishers never reached there because today they are trying to learn English to compete with us in IT. In the last three decades while we were sort of getting into the IT and trying to become the super power we continue to have one USP of ( not clear) cost. The model that Mr. fakirchand started probably three decades back probably when we were in school and after that whatever company started used the same model that reminds me of Hindi movies, whatever Hindi movie you see you have one boy two girls or two boys and one girl and nowadays two girls also. But the It model remains the same and when we started in 1993 three of us came together not because we were smarter but probably because it was second innings for us, we said we must do something different. If you want to do something different let’s looks at what so far no one has done. I always thought that the Indian It industry exports raw material and imports finished goods. But which probably all of us thought was the wrong thing to do or not so good thing to do when Britishers were ruling us. Probably initial period that was right so two decades we spent that and we never created oracle and Microsoft in India but we always exported people outside. We created kind of models off shoring, turn key jobs and so on and so forth. But at the end of the say it was the same model and typical. Arbitrage on the labor cost. In I-flex what we did in 1993 few came together and got a share capital of million dollars that is four crores at that time. Out of that four hundred thousand dollars were given by Citibank and why four hundred thousand because that was the law at that time and to be fair I…it was forty six ….and rest of the sixty percent we literally collected from friends. And people in Citibank. And Dharen just to correct your point on market cap between 1993 to 2006 today that one million dollar capital became 2.3 billion dollars market cap. In august 2005 Citi exited because they were venture capital investors and they stayed in this investment for last almost twelve years. They put in four hundred thousand dollars and they got six hundred million dollars back and when oracle was trying to look around their strategy in financial sector the company that they found was I-flex in the world and they paid six hundred million dollars in august ’05 and today that investment almost doubled.
That is the power of the brand that we created as a product company and hope fully will continue to grow the same way. From last four years we are number one in the world and there is a publication in UK does this ranking and nobody ever has done this in our industry or from India. we are there in 117 countries with 500 financial institutions using Iflex solutions, we work in Jamaica, we work in Japan, we work in Iceland and we work in south Africa. So I can say very proudly that I-flex cube which is a brand, an umbrella brand and we run almost fourteen products under it and now we have got another brand called rivelous, flex cube is used on the transactional process while the rivelous is used on something on business intelligence. Then we have got couple of brands acquired in US and France but what I say very proudly not just about the I-flex is an Indian, that here is a brand where sun never sets on it. it is in any given hour between Japan and Jamaica some or the other bank is doing the end of the transactions or processing that every bank goes thru on flex cube and some bank is doing the beginning of the day on flex cube. Of course that imposes lots of responsibilities on us because truly we have to run 24 by 7 support centers. Today we have 22 support centers; we have got 60 distributors in 117 countries. And our sales are spread over twenty five percent each in US, Europe, in Far East, Middle East and Africa. But the way in which we started we said that we will not just build a corporate brand because the corporate brand is very easy to build and to go to capital markets get your market cap up and the brand gets created is a corporate brand. We need to create a product brand and if we want to create a product brand then entire mindset that we have to change that we have built over three decades is made by Indian is made popular in three decades. Made in India was not made popular and that was the task that we took on hand. Nobody thought that something like banking solution will come as a product.
When we change the core banking solution we have to keep the engine running you can’t close down the bank, bank keeps on running and we change the solution of the core banking product and the bank keeps on running for example just to show that…in India when the times bank was acquired by the HDFC bank none of the customers realized that the bank has changed the solution behind and that’s the running engine that we have to change. So the responsibility is more and your quality and your trustworthiness which is required is more we call it a mission critical solution because if the bank does not do the end of day at a particular point or a particular day it will not be able to open the branch next day morning and that if you want to run in 117 countries across it becomes a big task. While creating that brand when we talk about the flex cube and we arrived at the brand name in 1996-97, before that we used to run multiple brands called micro banker and fill ware and money maker and so on. One thing we realized that for company of our size having multiple brands and protecting them across the world is going to be difficult and costly affair. So t create that bran equity we created an umbrella brand and we had lots of presentation from people like Dharain that what brand name we should adopt and ultimately we arrive at flex cube. And flex cube stands for flexible comprehensive universal banking environment. That is what the cube stands for. And at that time we were known as Citicorp information technologies so we had brand equity of Citi corp. base behind us and so we changed the name first and our product name got a umbrella brand, got that umbrella as second rank in the world in 1998-99 and 2000 three years and changed the company name to I-flex from Citi in 2001. 2002 we did our IPO at a valuation of thirty million dollars and today we are at 2.3 billion dollars. That is the story which is with the brand. Few things that I would like to share with you, one of the things that we always talked about is that we vertically focused and when I say vertically focused we take that as a major challenge because during 1998 – 2000 there was an immense pressure on the business model to get y2k business and grow 100% like all other companies were doing. Fortunately we were not listed at that time and therefore we adopted a policy that we wanted and continued our focus on vertical which is the financial sector within towards the banking, insurance and capital markets. Continued to build the domain knowledge, quantity that required by the world. We involved all stakeholders in it and our partners; we took help of our partners like IBM, like Oracle, like Microsoft, took advantage of their brand as an associate and we built this as our brand. We sharply identify our competition but the way in which in we competed with the people and brands like teminos I don’t know how many of you have heard of these brands as they are very specialized in banking sector, Sanchez and teminos and mysis who were probably born before we were born an they were doing business for last plenty decades in their mass markets. So we said that we are not going to go and compete with them at this point of time because our pockets won’t allow us. So where did we go? We went to Nigeria, we went to Ghana, and we went to twenty African countries at least those who were speaking English, we went to Philippines, we went to Thailand, we went to Malaysia and Indonesia to build our base and then enter Europe and then went to US. These are all English speaking and then we went o Spain as it is the second most spoken language, went to Latin America, went to Japan, probably will to china as well, went to Russia of course but while doing this the approach to the competition was not I call it as a foot ball game. One of my experiences in selling in Far East is that most of the deals happen on the golf course and I always wondered as to why they happen on the golf course? So I was talking to one of the people in Malaysia that what is so important about the golf? And he gave a very valid explanation, he said this is the only game where you do not play to beat the other guy, you try to excel your self. And this is the only game where you win when you get the maximum negative marks. Take foot ball or tennis or any other game you are trying to hit the ball to beat someone, beat the competition, in golf you try to excel your self and you are not trying to beat the competition. And that is why you can actually do a business deal on the golf course. I think that building the brand is like golf and not playing foot ball. You should not be competing like footballer but competing like a golf ball. So that’s why in most of the golf course you see the people chatting with each other and doing business and playing their game and winning. So I think that all of us should be golfers if we want to build our own brands, keep the higher bench marks, fortunately IT industry has been more outside India then with in India and from the Indian point of view of course this is very unfortunate. Now we are trying to expand the market in India. Always keep higher bench marks to achieve and come to the brand momentum which is mass into speed into direction so to create that entire 117 countries mass the momentum between 1997 to now we have got more then five hundred customers and the direction was very clear the financial sector and don’t dilute or diverse from where you are. Brand also guarantees independence especially when 40% is held by the Citi bank initially and now 50% is being held by Oracle. The kind of brand equity that we would have created I think would guarantee us independence because that brand it self carries lot of value. If company like oracle with twelve to thirteen to billion dollars revenue wants to have a strategy in financial sector thinks that I-flex as the best company and that is a great acknowledgement for us as management team to create that brand equity value. But time definitely weakens a brand and if time weakens a brand then we need to continuously invest not necessarily in the advertisements and the campaigns but to create that brand equity thru quality, thru customer references, thru faith in your own brand, passion of the people who you work with and the stakeholders passion and of all the things every brand holder to the owner of the brand should have a region. We talk about the road map on the brand but I would say we should have a region on the brand and when you talk about the I-flexes region on the brand I always give example of Intel. That Intel in every PC that you see anywhere in the world you see a small sticker that says Intel inside. Our region on the brand is plus cube. Every bank every branch on the world should have on their board should have plus cube inside and that’s our region. Thank you very much.
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