KANBAY SOFTWARE: On The e-Path

Kanbay Software India is located on the outskirts of

Pune. The wholly owned Indian subsidiary was established in 1989, as part of Kanbay’s approach of blending globalism with local flavor. A global e-enterprise integrator, its competencies spanned from legacy to web technologies. According to Dileep R Nath, MD, Kanbay, “When the US operations started with the idea of an offshore, multi-site concept, the major constraint for offshore work was the satellite link.

However, with the liberalization process here in India, we could move forward and set up links. It is not merely an offshore model that we follow, but a blend of models where offshore-onsite work is done. With subsidiaries in different parts of the world, it is easier for us to follow it.” “We have different teams at different locations who have expertise in that particular area, and we make use of their expertise. Like we have expertise in internet-related securities in our Australia center, and we leverage on it when we get a project,” confirms Vidyasagar Dharam, VP, Technical, explaining the advantage of multi-site facilities. 

Explaining the rationale to start its operations from the US, Nath says, “The US is the toughest and the largest market and we thought that by establishing our credentials there, it will be easier for us to take the operations to any part of the world.” The strength of the Indian subsidiary lies in the vast pool of skilled, trained and experienced personnel, which enables it to take over projects from all over the world. With a strong workforce of 400 , almost 50% of the total workforce, the Indian arm is in a position to create a lot of solutions. As Cyprian D’souza says, “It is like an engine with a lot of horse power driving the momentum.” And with local workforce being present across the geographies, it is easier for the company to tap the clients. 

Dealing with the workforce



Interestingly, the workforce utilization of the Indian arm on an average is 70%. However, the management is of the opinion that one particular subsidiary cannot be looked into as a single entity. “We may keep a large portion of our workforce on bench for strategic reasons or we may go for complete utilization of the workforce at one center, and keep the other center on bench,” says D’souza, discounting the factor that numbers do not give the true picture. Nath agrees with the approach and says that it can be looked upon as a positive or a negative thing as the situation warrants. “In our case, bench time is what people look forward to, as it gives them the opportunity to retool and retrain themselves for the emerging technologies.”

Focusing on the ‘e’



Kanbay’s focus is on web integration, internet security, customer intelligence and resource optimization. It follows a global e-enterprise model, where it feels that clicks and mortar companies require substantial infrastructure to be competitive. And as a result, Kanbay focuses on integrating the core systems with the strategy, design and application. As part of its global e-enterprise approach, it has E*Path, which is built on the model of security, integration and quality. The methodology is a global network of connected resources in multiple locations providing onsite and virtual solutions delivery, with a 24×7 project development and support. 

The Kanbay eSolutions Center (KeC) was established in 1995 in Pune. The KeC differentiators have been its global research and development center–the E*Forum–and people care. The people care philosophy is based on quality recruitment. Speaking on the strength of KeC, Dharam says, “We have expertise in the areas of credit cards, telecom and insurance. We also work closely with technology companies. We have a deep understanding of the markets and the industry needs and our solutions are built on the best practices,” he says.

Kanbay’s in-house expertise helps the client create a comprehensive risk management plan and an internet security policy. A strong security network is part of every project design and implementation and for that a full suite of hardware and software applications are available for a range of security solutions and infrastructure. 

Incidentally, KeC is the only center in the group that acts as a development center for the whole group. As part of integrating the core systems, which is a requisite for an internet integrator model, Kanbay’s solutions involve maximum use of existing client systems and processes, which enhances the return on investment. Moreover, the extensive technology and industry experience offers clients the opportunity to optimize scarce resources. 

Leveraging strengths



Kanbay’s strength has been its trained workforce. The retention rate as Kanbay would prefer to stress on rather than the often used attrition rate is pretty high. While in 1996, the retention rate was 82% when the workforce strength was just 30%, it went up to 85% in 1997, in 1998 it went up further to 91%. In 1999, it touched 93% with a workforce of 400. A commendable performance by any standards. Now the company has embarked on an ambitious plan to increase its workforce to 2,500 by 2002. 

This success has been due to the open culture of training, transparency of information, access to all resources and participative systems. As Nath says, “Each group has a President, a VP and other office-bearers. Everyone is assigned a particular responsibility and there is no top down approach.” It is the value-based culture that fosters freedom and responsibility among the young Kanbayans. Over and above this, salary being in the 75th percentile of the industry along with access to industry data and assistance for asset building, make its workforce stick to Kanbay. “As far as the stock options are concerned, based on the performance and responsibility, stock options are awarded to employees, who have completed at least two years in the organization. Everyone who qualifies on this criteria is awarded stock options,” says D’souza. The vesting period is four years. 

Black spots



However, the company’s financials do not look promising. Kanbay Group’s consolidated turnover for 1999 was $43 million, a growth of approximately 23% over the revenue in 1998. It has, however, charted out an ambitious growth rate of 70% for 2000 and expects to close the year at $70 million. Even the average growth rate for the last three years has been just 60%. At a time when the IT industry is taking off in a big way it is surprising why Kanbay has not been able to perform up to industry standards. Moreover, the Indian arm contributes approximately 20% to the group’s turnover. 

Kanbay also has plans to tap the capital markets, both in India and the US. Considering that more and more software companies are riding high on the bourses, there is no doubt that Kanbay will definitely be a success. However, the company refused to divulge rest of the financial details as well as details about its initial public offer. 

Mission to excel



Kanbay’s mission is ‘enabling business to excel.’ And it approaches its mission through its multi-site ability to deliver IT solutions utilizing resources across a variety of geographic and culturally diverse locations. Kanbay’s strength is in creating an environment that unites the diverse project elements into a coherent process. However, as the legendary Jack Welch of GE said, “When the rate of change outside your business exceeds the rate of change inside your business, the end is near.” Kanbay has been able to keep pace with the rate of change and whether it will be able to move a step ahead will differentiate it from the rest of the pack.

Rajesh Menon



in Pune