More likely one of our employees would've delivered an Amazon packet: Ajit Isaac
Interview with CMD & CEO, Quess Corp
Raghu Krishnan | Bengaluru
May 8, 2016 Last Updated at 22:06 IST
Quess Corp, the nine-year-old firm backed by India-born Canadian billionaire Prem Watsa, is preparing itself for a public issue. Last week, it got the Securities and Exchange Board of India nod for an initial public offering. Ajit Isaac, chairman and managing director and chief executive of Quess Corp, among the pioneers of temp staffing in India, tells Raghu Krishnan that the best is yet to come for the firm as it looks at growing its share in the selling, general and administrative (SG&A) expenses. Excerpts:
How different are you from TeamLease?
Only one fourth of our business resembles TeamLease, three fourths is different. We are a different company than a payroll company. If you want people that you want to employ, with TeamLease you transfer them on their payroll. We do lot of hiring, we charge a fee and our business is therefore much higher in profitability with different set of services in spite of the fact that we both are human resources company. Out of 121,000 people we have got, 85,000 are in temp staffing. TeamLease has around 100,000 or so. We make little more money than what they do. This year in first six months, revenue was Rs 1,530 crore and an earnings before interest, taxes, depreciation and amortisation (Ebidta) was Rs 74 crore and at the margin level, we are around five-six per cent. It is a whole different game. In hiring, we have 300 recruiters and we will be among the top three recruiting businesses, separately.
What is the other three fourths business?
We maintain steel plants, power plants and large industrial equipment, and have over 4,000 engineers. We are India's largest industrial asset management company. We have a facilities management business — with over 150 million sq ft of real estate assets such as malls, public utilities and hospitals. We maintain part of Delhi airport. We have 20,000 people in this and it is an essential services business. And global tech solutions, which is the core solution for property and casualty business in insurance.
What happens when they become aggressive in India?
We have a head start. We have a well-crafted strategy of offering hard and soft services. We offer only 30 mn sq ft of pest control of the 150 mn sq ft of the assets we maintain. For outsourcing, you can't put boundaries. It is as much as you can do. When we started with Samsung, they had single-digit market share and 300 people. Now, there are 8,000 people from us who are working for them. We are such an integral part of Samsung mobile phone success story in India. Samsung builds great phones, more applications, smart chips. We handle its customer services and look at what they have achieved.
You also have presence in e-commerce
We’ve 8,000 people, working for Amazon. It is more likely one of our employees would deliver if you ordered goods on Amazon. Firms will build merchandise, branding and technology, we are good at last-mile delivery. We have a service level agreement culture in the company. New guys have to build everything from scratch. We do 25,000 parcels a day and if we can double that by the end of the year, we should be in great shape. We do it for four-five e-commerce firms including Urban Ladder. Dependo logistics is running that part of the business. We can set up distribution network and have a very asset light model. In e-commerce, we have 12,000-14,000 people.
But, can you continue to be frugal considering that private equity/VC-backed can compete and buy market share throwing cash?
Our biggest assets is not that the company is $230 million with Rs 74-crore Ebidta. That is not what makes our company, the biggest thing that makes our company is the culture. It takes years and years to build the culture, it takes minutes to give it away. If you start competing with the people with big fat cheques from private equity people by throwing money, you have lost the plot.
The best way to compete with them is by running your operations more efficient, treating your people well and build sustainable model of business.
That is what I think it sets us apart. We have managed to do this in each of business we are in. We have higher margins which is growing. In an economy, growing six per cent, we have grown 65 per cent compound annual growth rate (CAGR) with a margin expansion of two to five per cent. Our days sales outstanding (DSO) has dropped to 60 from 90.
Aren't you in diverse businesses?
We want to do more and get more of SG&A expenditure of a company. As much as line expenditure of a company, we want to be in all of them. Globally, there are companies such as Serco, Interserve and Sodexho, who have built large businesses.
How much of the customer's wallet size you have been able to tap?
It is very difficult to aggregate the SG&A expenses of all your companies. So, in my sense, we are not dealing with not more than two-four per cent of the SG&A expenses of corporations. That shows the headroom for growth. In the people business, the organised players don't have 15 per cent market share of the entire industry. The Indian economy saw three phases of growth, 1991-95 — telecom growth and banking licenses; 2000 — internet, telecom and technology and then came retail and insurance, today lot of e-commerce industry. In each wave, there were a set of services that grew with the core industries. In the gold rush that happened in the US, most money was not made by the gold miners, but the transporters. Those were the services guys and (here) we are the services guys.
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