Kalra Puts Persistent Growth On Steroids

PUNE-BASED Persistent Systems transitioned from a promoter-run entity to bringing a professional CEO in 2019 after Sebi asked listed companies to separate roles of chairman & managing director and CEO. It could not have asked for a better gift. Though the tenure of first CEO Christopher O’Conner was short-lived, in October 2020, IT industry veteran Sandeep Kalra, who had joined in May 2019 as executive director and president of technology services unit, was elevated as CEO. He has put the IT services company on steroids by taking revenues from $480 million in FY19 to $1.18 billion in FY24.

Recalling what convinced him to take up the job when he met promoter and CMD Anand Deshpande, Kalra says the company always had technology capabilities, though its go-to-market strategy lacked a punch. “In fact, when I was talking to Anand, I made a presentation which said it’s not about a new story but a rallying cry. It’s about doubling down on go-to-market and a five-year vision for $1 billion revenue by 2024.” Persistent hit the $1 billion revenue mark in FY23.

The growth strategy involved focusing on technology and reorganising the company with clearly-defined verticals — technology, BFSI and healthcare life sciences, apart from shoring up the leadership team. Persistent also started engaging closely with tech giants Microsoft, Amazon and Google through industry partnerships and built close relationship with global consultancy firms doing tech work. It changed its perception from a small tech firm to a company with good capabilities and teeth to fight bigger peers for large deals. New clients such as private equity funds and their portfolio companies, along with rebranding, started giving results. “We started winning larger deals and as life has it, confidence builds confidence, and that becomes a flywheel. In the last five years, we have delivered some of the best growth rates in the industry,” says Kalra.

To put growth in perspective, in FY21, with 13,680 people, revenue rose 12.5% to $566 million. Of the three industry segments where it operates — Software, Hi-Tech & Emerging Industries (SHEI), BFSI and Healthcare & Lifesciences — nearly 50% revenue came from SHEI, 30% from BFSI and rest from Healthcare & Lifesciences. Top 10 clients accounted for 47.7% revenue. It had just 17 clients in $5 million-plus bucket. In FY24, with $1.18 billion revenue and 23,850 people, top 10 clients accounted for 40% revenue. It had 40 clients with $5 million-plus revenue. Total contract value (renewals & new bookings) was $1.8 billion. SHEI accounted for 47.4% revenue share; BFSI was at nearly 33%.

In fight against larger peers, nimbleness, ability to deploy A-team and eye for detail set apart not just Persistent but most mid-tier IT firms, says Kalra. While the company may lack the ability to deploy large teams, it is taking on big firms in outsourced product development as well as application development. “We don’t do ERPs. There are areas where we are very strong and can take on right from an Accenture to large Indian IT firms or a large European outsourcer,” he adds.

Kalra has also led acquisition of more than six companies. In September 2021, it bought North Carolina-based Software Corporation International and its affiliate, Fusion360, and business of New Jersey-based Shree Partners, including its subsidiary in India, to bolster its BFSI offering in payment solutions. In 2022, it acquired New Jersey-based Data Glove Inc. for nearly $90.50 million to boost Azure-based digital transformation and other offerings in the Microsoft stack. More recently, in 2024, it acquired select assets of SoHo Dragon Inc. for $4.7 million to consolidate relationship with a strategic BFSI customer. Kalra says buying revenues is not an option and a good company should not do it. “Our customer set is impeccable. We are not lacking prospects or customers,” he says, adding that the only aim of acquisitions is addition of capabilities. More recently, the company acquired New Jersey-based Starfish Associates. With many Fortune 500 companies as clients, the acquisition of this enterprise communications automation platform will add to its AI engineering capabilities.

Persistent is also betting on AI with its SASVA digital engineering platform through which it sees a potential to deliver higher value and productivity. The company has been a part of AI development with partners such as IBM and others for over a decade now, says Kalra. Today, focus on AI has taken two forms — AI for tech and AI for enterprises. The company has developed IPs and accelerators such as iAURA and GenAI Hub which can help enterprises speed up adoption of Gen AI. In 2023, it launched a GenAI-powered Open Source Maintenance Service that targets both enterprise software and enterprise IT organisations and uses GenAI to ensure that clients’ open source software remains up to date. It currently has over 75 proofs of concept. “If I look at last 18 months, the amount of work we have seen in our data and AI business has got to do more with plumbing. Getting organisations ready for Gen AI is taking off big time,” he says, adding that the company’s data AI business is growing at nearly 45% a year. The company has seen an uptrend in market capitalisation from $2 billion in 2021 to $7.3 billion as on March 31, 2024.

Leadership Mantra

Having been part of leadership team in large companies like HCL Tech, Sandeep feels unlearning is essential for any leader to adapt to the scale of the business at hand. “While there are lessons to be learnt at large firms, Rome was not built in a day, and if you just bring philosophies of a larger firm to a smaller firm, the latter will not be prepared for it,” he says, adding, “It took me nearly six months to adapt and earn the trust of people by being in the field with them.” A father of three daughters, who are all into sports, Sandeep likes to spend his free time travelling and cooking. “Cooking is a good stress buster, even if you’re not traveling. I love to cook,” he says.