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CM: Is it just about lowering costs? Or what are the types of questions board members are asking?

Vashistha: Instead of just asking the qiuestion: “Can we reduce the cost of this IT initiative,” CEOs and board members are asking: “How do you leverage services globalization to create competitive advantage?”

We focus mostly on three things: How do you grow your business? How do you improve operations? How do you better manage your risks? So companies are asking: “Help us understand across the farm how can we improve operations.” Now, of course, we limit our company’s advisory practice – to one lever which is services globalization.

CM: How has the firm’s organization responded to the rapid growth you’ve experienced in the last few years?

Vashistha: I often refer to 2004 as a leveling year, and what I mean by that is clients really paused in 2004. It had a lot to do with the elections and the (offshoring) backlash. And they said, “Let’s re-look at what we’ve been doing and let’s make sure that what we are doing is the right thing.” So there wasn’t big growth that year. In 2004, growth was less than 20 percent a year. But 2005, I mean I wouldn’t be surprised if our growth is much higher than 50 percent.

Now, in response to this the number of senior consultants we now have has grown significantly. Because what we’re finding out is that the kind of consulting that we do today is much more strategic than it used to be. So my senior consultants are twice what they were a year ago. We’ll probably have seventy-five (employees) or so by the time this year is over. But from a transaction perspective, the volume that we’re handling, it’s significantly higher. It’s almost twice what it was a couple of years ago.

CM: Where are you finding talent these days?

Vashistha: We are finding some very good partners that are disenchanted with large consulting companies. So we have some partners we brought on board from Ernst & Young and from Bain. These are partners that are looking for much more flexibility, and are kind of disenchanted with the large global consulting model. But these partners are looking for a good amount of flexibility and independence in decision making.

So, while a year ago I would say this firm was really run by the force of my personality, that’s no longer the case. And it’s a good change. We’ve created a structure of better governance by creating an executive committee and a management committee. It has given partners a bigger say in the governance of the firm.

CM: What parts of the world do you expect to play the biggest role in services globalization. Obviously, India is now at the forefront.

Vashistha: We believe very strongly that if you’re a company of a certain size – if you’re a small company it may not be as important, but if you’re a sizable company – you have to take a geographic portfolio approach to leveraging services globalization. And what that means is that locations like Philippines and China are important locations for you to think about in your plan. Philippines, for example, is a much better location for U.S.-based clients, for voice-based processes.

CM: So we see different parts of the world are building their reputation in certain areas.

Vashistha: Exactly. I would say that every month we now get calls from at least one or two countries asking us to advise them on how they could be better destinations for this business. For example, if you were doing application development that is very algorithm-based, mathematical-based and it’s not a very big deployment, engineers in Russia are excellent at it. And so the challenge in my business is when you look for advisory consultants within locations like China or Philippines, you are much likelier to find people with strong technical implementation skills rather than strong consultants.

In India we’re finding, that we have better, but in Philippines and China finding strong consulting skills, especially at the strategy level along with a good understanding of services globalization is a tougher challenge.

CM: How is the middle market opportunity shaping up for the firm?

Vashistha: The mid-market opporutnity is going to be tremendous, because middle-market companies are realizing more and more that the costs associated with the war for talent won’t allow them to compete.

CM: Describe to us how your firm’s management is structured inside and outside the U.S.?

Vashistha: Offshore we actually have two levels that we don’t have in the U.S. In offshore locations we start people as analysts, and then we have managers, directors, and managing directors. A partner is at the managing director level. The manager and the analyst level are positions that we don’t have in the U.S. All the analytical work is definitely done out of offshore locations. Today, we have more partners offshore than there are in the U.S.

CM: Looking into the future what part of your firm’s business will IT related?

Vashistha: I believe that it’s probably going to be about 50 percent BPO. It’s probably going to be 40 percent IT. And if we’re speaking of IT infrastructure, I’d say in probably about three years, it will become about 10 percent of our business.

CM: We often hear about how financial services companies were among the early leaders in offshoring their operations, what other industries are stepping up their efforts?

Vashitha: Financial services were by far the earliest adopters. And their penetration is increasing pretty rapidly. But we’re finding a tremendous amount of growth in retail. They have a tremendous need to create competitive advantage. And from their back office side they just have their tremendous users of technology. Secondly, they have a high need for manipulation of data, which just makes them perfect candidates. And thirdly, they have a global workforce. And so it just makes them ideal candidates for both IT and BP offshore.

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