How he built a $100-million company

Innovation is the secret of their success. They believe a simple idea can transform lives. They dream big and are passionate about their goals. Here's a special series on India's best innovators and entrepreneurs, winners of the latest Nasscom Innovation Award 2008.

The Persistent Systems story

For business to happen, you need to have three things, 'N, B, A'. You should create a 'Need', the 'Budget' and have the 'Authority'. A founder's job is to sell new ideas to employees and customers," says Anand Deshpande, founder and chairman of Persistent Systems.

After working for a year at Hewlett-Packard in California, Deshpande headed back to India to start his own venture. Giving shape to his entrepreneurial dream was a big challenge at that time as the economy was going through difficult times. But the passion to start an enterprise and be successful kept him going.

"There has been a big change in the way technology was perceived then and today, right from the government policies to the number of market players everything has changed and so has the market dynamics," Deshpande explains.

A small venture with a few employees has grown substantially. Persistent crossed the $100 million revenue mark during FY08 and has delivered over 2,000 software products in the last five years.

He believes the foundation of any organisation must be trust. "Starting a business is not a risky proposition. You get to choose what you want to do, so it is very exciting. You need to have passion and believe in what you do," says Deshpande.

What are the features of the award-winning data processing solution? Persistent developed an innovative and comprehensive solution that enabled (tyre-maker) Bridgestone's dealers and service engineers to efficiently collect and update data from vehicles with a handheld device.

Bridgestone wanted a device which could detect the usage of tyres as it rents tyres to companies in Europe. As per the company's pay per use policy, transporters pay the company as per usage of the tyres instead of buying it.

The solution was targetted for deployment at 2,000 dealers (3,000-4,000 fleets) in more than 15 European countries. The device helped Bridgestone as there was no revenue loss due to incorrect or lost data. The device has improved the productivity of Bridgestone by 800 per cent.

How did the solution help Bridgestone? How challenging was the task?

Bridgestone's business requires their dealers and service engineers to undertake inspections of tyres on vehicles at various outdoor locations, often in difficult working conditions.

Data needs to be obtained regularly from thousands of vehicles across numerous fleets. The challenge was to capture the tyre usage data (millions of data points) on paper was inconvenient and messy due to the tough weather and working conditions, and often resulted in poor data quality.

Lost or incorrect data resulted in high operational costs and loss of revenue. The high cost of operation and risks involved resulted in poor acceptance of the tyre-as-a-service business model by dealers, creating a serious business challenge for the company. An efficient solution for easy and error-free data collection during inspections was desired.

How did you go about starting this company?

Starting Persistent Systems was a daunting task. In May 1990, when we started our work there was political uncertainty and the Indian economy was going through difficult times.

There has been a big change in the way technology was perceived then, and what we see today, right from the government policies to the number of market players everything has changed and so has the market dynamics.

One of the main reasons for getting customers was 'trust'. I firmly believe 'trust' should be the core foundation of any enterprise. Our first customer was O2 Technologies, who I had known while I was working with HP in the US. Our second customer was a fellow graduate student I had met during my academic years.

Our third customer was Microsoft, a customer that really helped us grow. Along the years I have learnt that network effect is an important sales tool.

For business to happen, you need to have three things, which I call the 'N B A' -- you should create a Need, the Budget and have the Authority. A founder's job is to sell to new employees and customers.

This role should not be delegated in the early stages of a company. Today, we are recognized as an award-winning technology company who pioneered the concept of outsourced software product development (OPD).

How many employees were there when you started and what is the strength now?

We were a handful people when we started and I am proud that today we are a big team of over 4,200 people and enjoy a presence in three continents.

What is the company's financial position? How are company's revenues growing?

Persistent crossed the $100-million revenue mark during FY08 (ending in March 2008) and has kept pace with its year over year revenue growth (CAGR) of over 59 per cent for the last 5 years.

The company has delivered over 2,000 software product releases to over 170 customers in the last five years.

What are the challenges that you face now?

The market is very volatile. The businesses are not growing fast. There is an uncertainty that affects business. But our business model is strong. We will work with customers and in tune with their needs.

What are the most important things an entrepreneur must have?

Starting a business is not a risky proposition. Of course, you get to choose what you want to do, so it is very exciting. . . But you need to have passion and need to believe in what you do.

Is education important for an entrepreneur to be successful?

It depends on the venture. Entrepreneurs need to solve real problems to be successful. India has a lot of talent, there is much more to be done to improve college education to make more people employable.

What are your views on innovation in India? How important is innovation for a company?

Indian companies are not leveraging innovation. (Oscar-winning film) Slumdog Millionaire is a good example of this. A R Rehman has done better music earlier. But he won the Oscar only for Slumdog. It was presented well through a good package. We have lot of innovations, but it is not promoted well.

Indian companies focus more on services than products. How important is a product-based innovation?

The relevance of product-based innovation is growing. In 5-7 years we will see more products coming from India. There is a huge market for products.

How do you see the growth of IT and BPO in India?

The short-term growth has definitely been hit. However, in the long term, IT will grow. It will be difficult to do without information technology.

What are your company's future plans?

We plan to be a leader in the outsourced product development.