Anuj Vaid, EVP – CMS IT Services explains the nature of his services and how it helps them against larger competitors..
What are the solutions and services in the CMSIT portfolio? Who are the latest customers wins?
We have two strong areas of services, one is managed services and the other is system integration. Managed services span the spectrum of infrastructure and applications. These include data center services, cloud services, network management services, end user management services, cybersecurity managed services, application services.
We run a command center to provide cyber security services that are ongoing. We also provide a model of application on a manager mode. So whether it is a cybersecurity solution, or any other solution, we can provide a SaaS hosted from our cloud model.
We have more than 300 customers who are basically the who’s who in the enterprise customer list. Some good recent wins include a major private sector bank, a Fortune 500 Financial Services company, an American multinational beverage corporation), an American multinational food , Insurance arm of largest state-owned banking and financial services company in India and a leading general insurance company. We have very good customers for managed services and we compete and win against the best in that domain.
Next is system integration where we do all kinds of complex projects, including data center migrations from data center to cloud, application migrations, or hyper-converged cloud setups. We have done hyper-converged cloud at LIC and Oil India. The more complex the project, the better we deliver because we are a company with over 6,000 people across the nook and corner of India and we are able to harness resources like nobody else.
Outside of these two, we do digital services, create responsive portals, and robotic process automation with Automation Anywhere as the primary partner. We have almost a 100 advanced certified resources on RPA with them. We also do availability services, by which we can keep data centers and IT equipment working 247/ across the country all the time. All of these services we can provide onsite, or on a hybrid model or completely from remote.
We are also using the latest technologies like bots, AI/ML, and we have weaved these technologies to every single one of our offerings. In fact, we do not do application services in the traditional way, but we build self help solutions, bots, automated as we call it a run-book solution. We are able to offer those to the customers so that the cost of these services goes down on an ongoing basis year on year whereas traditionally the cost goes up. Here the cost never goes up because we are reducing the effort, and the cost of labour goes down and therefore we are able to pass that benefit to the customers together with a higher agility of operations.
How will you trace the evolution of CMS IT Services?
CMS IT Services in its current form was born in 2015. It was born out of a demerger from a company then called CMS info systems, which was a Blackstone owned entity that primarily did two things—IT services and cash management. Cash management basically included ATM replenishment, retail chain, cash management, among others.
Blackstone had acquired these entities from CMS Computers in 2008 and subsequently the ATM scenario saw a big boom in India. So Blackstone became almost completely focused together with the management of CMS Info on the cash business. As a result, the IT business saw very bad days as it diminished and became loss-making.
Then in 2013, Blackstone started thinking of exiting and selling off the cash business and they were to choose whether they should continue with the IT business and invest more or they should sell that as well. Finally they chose to continue investing in IT and put the focus on it and that is when a new management team joined CMS IT Services as the company is now called. Since then we are a complete IT only company.
There were two other divisions also that came with us in the de-merger. These were the print services business and the institute business, which was the education business that CMS had. We have since hived off both of those units and neither exists as CMS brand now.
Since the de-merger from CMS Infosystems, our revenues have almost tripled. We are a profitable, healthy company, and most importantly, the character of our customers has seen a complete transformation. So earlier if a couple of deals were giving us annually a crore, today we have maybe 70- 80 of them.
Today we are able to execute not only mega deals but very complex ones too. We are winning business very frequently from some of our large competitors among others. We are looking to accelerate this journey.
What are the proportional contributions to the CMSITtopline from your different technology business lines?
70% of our business comes from managed services today while 30% of the business comes from the rest of elementary coding system integration. Within managed services, data center services comprise about 45% of the business, application business is about 10% and the rest of the 45% is basically in the end user space.
System integration is almost completely in the data center space. For RPA, we have almost a 100certified people on Automation Anywhere and our areas of focus are twofold. One is in running the business part of an enterprise, where we use RPA to create efficiencies in agility. On the functional side, we are focused on two or three areas like procurement automation where we find the procurement processes, especially with a tool like SAP, still very cumbersome. There are too many manual steps and we are automating that. We have many use cases there and we also focused on the finance side automation like auto invoicing kinds of processes.
What is the traction from different industry domains?
From an industry perspective, we focus on five key industries viz, BFSI, automotive, life sciences, healthcare and retail. We work with functional consultants who are able to identify bottlenecks in processes and who in turn work with our technical consultants to be able to roll out robots or bot workers to do the jobs.
From an industrial contribution perspective, 70% of our business comes from private enterprise, mainly large customers. 25% comes from PSU enterprises like BHEL and the balance 5% comes from the government. Most of our government exposure is limited to select state governments where we do complex projects on Mission Modes rather than trying to do broad-based bidding anywhere. For example, in Assam, we manage the crime and criminal tracking system, and we just picked up the same order in Mizoram as well.
We are also doing very well in the utility business where we manage many customers, both in the government and private segments. In private sector we are working with two of the leading power generation companies while in government we work with West Bengal Power, Assam Power, Chhattisgarh Power among utility accounts.
What has been the technological impact on CMS IT Services business in terms of changing workloads in a predominantly WFH environment?
Work from home is here to stay and we will see companies having WFH even if the pandemic boils over. Either companies will have the preparedness to shift to work from home or we will work in a hybrid on-prem and home model, for a long time to come. Fundamentally this involves a shift in end-user computing and security postures.
While everybody scrambled and got VPNs in place very quickly, the bigger things around employee productivity, as well as security needs working. There used to be various models, and scenarios especially in BFSI. JP Morgan, Goldman Sachs, Bank of America and some of these companies never even allowed you to walk in with your phone and many of them did not allow people to carry laptops home. Now obviously there is no other option.
We have really used automation very differently here. So today, you have a need to be able to service anywhere from anywhere. For example, I am sitting at home, and as a service provider I have to support the customer who is sitting in Kolkata and if there is a issue, I need to be able to figure out how to sort it out. Today we have technologies which harness conversational bots and other bots that allows this. We have a queuing technology that can move a call on a right basis with customer, what problem, what location, etc, to the right person, sitting at home and available. He, or she can then solve that problem and if you feel that he/ she is unable to solve the problem and it needs a visit, my field engineering team from Kolkata can make a visit and go and solve the problem at home. This is a very a holistic end to end solution that we put in place and it can just work on bot technologies out of your Microsoft Teams. You can start using the bot and work with our solution set.
The market will also see an acceleration towards cloud. Unfortunately, if you look at the Indian context here, the movement to cloud was very limited outside of the start-up ecosystem. So when you look at the unicorns, whether it is Amazon or Flipkart or whichever of these companies, they were using the cloud amazingly well. They were born-in-the cloud companies. On the other hand, traditional enterprises have taken very tepid steps to move to the cloud. This current scenario will make them to rethink and I expect to see acceleration towards cloud.
Of course, security will see a huge spin. How do we secure ourselves in a scenario where there are multiple clouds? With people working from wherever, how do we monitor security? How do we intervene? We will also see a significant investment in resilience and BCP. Even if I had a DC and DR, I still cannot do anything in the current sudden scenario. BCP and resiliency have now a very different meaning.
How many companies are doing a proper BCP audit?
If we look at BCP auditsas well as drills, they left a lot to be desired and companies are revisiting that now. Again some companies would not care because they do not have that paranoia about the DC/DR, but some companies will start pushing the work to making automated BCP/DRs and also define very strong policies for them. As we are a managed services company, we constantly conduct DR drills. You will see the emergence of tools like Sanovi and Perpetuuiti and others that will push the envelope in terms of some of these automatic things.
What has been the impact of the current situation on the existing contracts in terms of SLAs as well as financial challenges?
The impact soon started becoming visible to businesses. Everybody scrambled and started asking for discounts. There are companies that are deeply impacted but even companies that are not as deeply hurt are also asking for discounts and pushing hard. The standard assumption is there is no impact to us.
I think we went through an exercise where we were very flexible with customers. Every one of them who came to us, we very clearly drew out a map as to what can be done. This is what will be the impact of doing what we are doing. This is the short term gain and this is the short term loss, and this is the long term gain and long term loss. And fundamentally, we have done a very effective job of almost securing of keeping all our customers.
Of course, we have made some concessions here and there for the right reasons. For example, if our office is completely shut down for just too long and there is nobody going, then we have taken time and with a little bit of a notice period try to move our resources to alternate projects. Therefore the customer does not continue paying for something which is just not going to be used for months at a go. Customers have been fairly open and understanding in most times.
From a SLA perspective there have been surprising revelations. The whole problem of a campus network is almost gone because there is nobody on the campus. So if I was handling 100 calls and let’s say 30 calls I was not able to connect because of an engineer availability problem, those calls are not coming my way and the user knows that if there is a network issue, it is very likely at home because the service provider is not as good. So the call is shifted away from one category to another category. The difficulty now is people on either side, either the engineer or the user side communication, has started to matter a lot more, how does a user explain a problem or an engineer understand the problem?
We have done a lot of things to enhance the understanding ability of the engineer. We have a lot of automation tools available by which very often a customer did not tell us what is the issue but we figure it out. So that has really helped us manage them, deliver the SLAs that we were delivering in most cases, almost not seeing a case of a SLA dilution in any of our accounts.
How will you be balancing between acquisition of new customers and retention of existing customers?
Because the lock down started in end of March and March typically is the biggest month of the year, we saw the erosion. It was not just orders moving from Q4 to Q1, but many of those orders disappeared because the customer chose to do nothing. Because there was so much to do in their own environments, why do something new and have a bigger headache in difficult times. So that quarter hit us quite a bit.
Fortunately for us, our Q1 was very good and we turned into very good contracts, more so on the PSU side that were in the works for a while. The current quarter looks as good as things were before the pandemic. Fundamentally, I would say that while the initial reaction was to hold customer, n we worked very hard and customer upseller was a big thing that we were running. But today we believe that because of our strengths and unlike a lot of other companies, as we do not outsource the execution, we have benefited in different ways.
Our attrition is almost invisible right now as against a very high attrition in the field engineering area. So a program has become much steadier in that sense. The second thing is that there is a need for people to look at costs and many of the biggies are unwilling to look at it. So people have turned to us and it fits our overall structure, it fits our business direction and that is a critical mode business. So we have closed a couple of very large banks as managed services customers in the last three weeks which is very unusual actually in these times.
From my perspective, a long term impact will happen. There is a lot of churn that is happening in the market, therefore there will be a churn that will happen for providers. So Bharti AXA got sold to ICICI Lombard etc and many if these things are happening, and some companies are going bust. There will be a pressure on smaller enterprises. All of this will cause disruption. We have to watch this holiday quarter very carefully because it will tell us a lot.
How are your teams getting ready to close deals virtually?
I think that customers are still not settled on being able to execute deals remotely. It is not going to be an easy transition and rightfully so in this business, or for that matter in any business where especially services are involved, people like to look leader from the supplier side in the eye and get a certain pulse. It is difficult to do it on a Zoom call, but eventually people will do it because there is no option. But it is not easy.
The transition will take timeVery often wherever we have closed, we have also seen that, towards the end we have had one meeting in a secure & safe way. For example, banks are essential services and they are open, so we would have a hybrid engagement, both-on prem plus WFH working right now.
What are the unique differentiators for CMS IT Services against other large IT services competitors?
First we have the delivery ability of a large enterprise with 6500 people across the country. We have the ability to personalize for an entity that a large company cannot do. A small company does not have the delivery expertise, and a large company does not have the ability to personalize whereas we very nicely combined both of them. We have created an extremely flat hierarchy. So the customer engages with the accomplished people on the other side. And that obviously keeps projects running well on the ability to deliver and personalize.
Secondly, we are sharply focused on the Indian geography. People very clearly know there is nowhere else to go because the competitors are getting dollar business from US today. This is more attractive tomorrow than squeezes there in India. That is not the case with us. We are very focused on the India market. Our cost structures, our people are all of about that. Because you can work with a lot more slack and at times the breadth of skills that are needed in India are much higher because you cannot afford 50 people to do a job you are in, without commercials. We are very tuned to the India market.
The third thing is that our offerings are also for the Indian market. For example, IOT will not go whole hog into IOT simply because there was a lot of experimentation going on in there\So we are waiting for the time and sharply focusing on things that customers want to do.
Another very critical piece is that we do not outsource our business. Many of the others, when they get a business, will outsource parts of it to many different companies and have a program management team that basically delivers the project for them. We do not tend to do that. We work with our own people and that provides a consistency of delivery. People work within the same framework across geographies and locations. They have a similar concept about the hierarchy, they come through the same hiring engine and they work in the same culture. These things become important to when you want to execute predictively and customers work with us barely see change in people. We have a retention rate of more than 97%.
How does CMS IT Services ensure margins and profitability in enterprise IT consumption?
70% of our business comes from managed services and within that 45% coming in from the data center cloud and network side. But that does not mean that that business only in the traditional business. We are doing software defined everything now. We are doing public cloud management.
The internal concept is we have a certain set of services that we call volume services and then a certain type of services that we call value services. Our aim is to keep growing the value services year on year. Almost 100% was volume services six years ago, but today about 40-45% is value business and we are going higher in the services pyramid on a regular basis. We are planning more and more high in automating at the bottom level.
The second thing is that we have designed and organized with them the very base of the pyramid, so that the cost structures are in line with what we do. You do not want to be doing everything everywhere for everybody and stretching yourself or spreading yourself too thin. And the concept of the pyramid that we have is designed to the kind of services that we do and for the markets we deliver to.
Third, we do not try to do a thousand things uniquely for everybody. We try to evolve themes or plays that we do uniquely for somebody. And then replicate that across multiple customers, because that creates a higher stability, and a higher probability of success. Some of these things make it effective for us. IT as a business now has a lot of commoditized components and we need to have that journey on a daily basis when we look at shifting and doing more value, more margin, and conduct a creative business on a daily basis.