Published on The CEO Magazine
From debt-riddled to a multimillion-dollar company, Firstsource Solutions is reaping the benefits after a period of major transformation.
Being nimble in an ever-changing world, a focus on innovation and a commitment to acting humanely were the things on Rajesh Subramaniam’s mind when he was first appointed managing director and CEO of the Indian-based global BPO Firstsource. It was 2012 when he re-joined Firstsource, prior to which, during his stint with the company from 2001-08, he was head of Strategy and Corporate Development until he became CFO.
Firstsource was going through some difficulties: it was struggling to keep up with the global evolution of its industry, so drastic changes were needed. Rajesh stepped up to the challenge with a mandate to restructure the business, repay any debts, and turn up the performance. In a little over 6 months, the turnaround – for the most part – was complete. Here he chats to The CEO Magazine about the rewarding journey.
Rajesh Subramaniam, MD and CEO at Firstsource, gives an insight into the challenges faced ensuring the company has become nimble, agile and responsive to market requirements in this new article for The CEO Magazine.
What changes have you seen within the BPO industry, and how did this lead to the necessary transformation of Firstsource?
Between 2001 and 2008, it was a standardised industry. BPO was in its infancy and it was on a forward trajectory. The rising tide of outsourcing was significant, and I think there were a lot of other companies that surfaced at the same time as us.
When I returned to Firstsource in 2012, after working as the managing director for Walden India Advisors, I found that between 2008 and 2011 the industry had transformed itself into being a much more mature one. When you become a mature business for a certain type of activity, you need to try to reinvent yourself if you want to get the next wave of benefits: to see where innovation can take you, to drive opportunities, and to create a continuum of growth and profitability. That’s where I think Firstsource missed its trick.
My stint at Walden broadened my outlook because I had the opportunity to interact with a culturally diverse mix of people, cutting across industries. I saw opportunities from China, Taiwan, Singapore, India, Israel and the US. I could appreciate the magnitude and the speed of change that was happening in the different market segments. Returning to Firstsource, I recognised that the company had basically been trading on its past glories. It hadn’t been externally focused or open to change, and it didn’t have the innovation required to delight customers, which then ultimately delighted the shareholders and the employees, in that order.
Innovation has been an important part, then?
Yes, innovation and basic awareness. I saw Firstsource to be an inwardly focused company, and with that your benchmarks are muted. You’re benchmarking against what you believe is the performance level, rather than basing it on the industry as a whole. A lot of the work in the first 6 months was gut-wrenching: we had to reduce headcount, hold people accountable, get people to take ownership, and ensure the company became nimble, agile and was responsive to market requirements.
We had to ensure that everyone understood the basic elements of running a business with sound commercial principles, referencing the foundations of how good businesses are created. It was a lot of hard work, but to be honest it wasn’t rocket science. It was a commonsense-driven approach.As long as I could align us with the right people who would stay on the journey of pulling this company out of the mess it was in, then we could take it to the place that it needed to be.
Are you happy with the results so far?
We had a gross debt of more than US$420 million in August 2011, and now our net debt is positioned at just under US$77 million. That’s a dramatic turnaround.
We are now so well integrated with market forces that we are affecting our customers’ businesses for the better. We had to transform ourselves because we can’t go to our customer with a broken car while trying to compete in a Formula One race and then tell them how to run their business. We needed to fix us first. We had to think: How do we engage, retain and motivate our employees? And how do we drive the right behaviours of leadership?
We also had to move our mindset away from being a supplier-oriented company towards a demand-oriented company. Once you align the demand side with the supply side, I think the results are magical.
Today our growth rates are in excess of 15% – well above our competitors – and in another year we will be growing higher than any of the mass-predicted rates. The transformation we have been on over the past 3 years is now bearing fruit.
What are your future plans for Firstsource?
We have a clear strategy. We will be in 3 key verticals: health care; banking, financial services and insurance; telecommunications; and media. The way we manage our verticals will be by delivering services across the customer life-cycle spectrum. From being a competent service provider historically, today we are seen as end-to-end service providers.
You have said that employees – of which Firstsource has more than 25,000 – are your greatest assets. Why?
Our value system is the acronym IIPACE: integrity, innovation, people-centricity, agility, customer sensitivity and excellence. What I tell my employees is: ‘Please wake up to creating shareholder value.’ It’s very simple – there are 133,000 shareholders in the company, a spectrum of investors, and every action that our employees take should, in its own way, activate and create value for our shareholders.
If we can award our shareholders, then we cannot have a bigger sense of achievement, because at the end of the day they are the constituents who have put their hard-earned money into trusting the employees and the management team of this company. Every success belongs to them.
Ultimately, I believe that people assets, as well as technology assets, are going to determine which businesses will survive or die in the future.