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This was a conference organized recently by TiE Bangalore Chapter with speakers from different spectrum and variety of companies and moderated by Mr. Sanjay Anandaram, TiE Bangalore Charter Member & Managing Director JumpStartUp and our (S7 Software) mentor too in the NASSCOM mentor panel.
The speakers were Panindra Sama, Founder and CEO of redBus.in, India’s largest bus tickets aggregator, Mr. K Ganesh, Chairman and CEO of Tutorvista, a consumer Internet company in education services space, Mr. Subash Menon, CEO of Subex, a leader in the telecom software space with a niche focus in revenue maximization and Mr Sudhir Sethi, Chairman - IDG Ventures, a US$150 Million early-stage technology venture capital fund.
The topic was decided to be on these lines - Given the prevailing environment, the abstract mantra to hunker down, cut costs and conserve cash and somehow survive till the situation improves is on everyone’s lips and minds. But the devil is in the specifics of the “how”, “how long” and the “what”.
This was exactly what was addressed in the conference. This looked like a mini session of what we had at NLIF recently in Mumbai but that was on a very elaborative scale (which I have blogged here). In my opinion this was good but not all point were touched.
Ganesh said that the way you tackle recession all depends on what kind of a company are you (domestic or global, VC funded or not, young startup or a established or a blue chip etc) and what cash reserves you have. He also touched on points like dropping ambitious projects but work mainly on core projects or the most essential projects. He said that raising capital is going to be very tough. He also talked about laying off when required but insisted on say one time surgery kind – get done and move on. He also stressed to listening to customers and making changes in the business model based on what the market is telling. For example they used to offer $100 per year any number of sessions, but clients in the tough times started asking for fewer limited sessions at a lesser and that is what they are offering now and say for a longer duration which has probably higher revenues and customer lock-in in the longer range.
Subash talked about cutting costs and he divided into two sections, cost involved with existing clients and costs involved with potential clients and he said not to touch the former one but always reduce the latter one. His advice was that, because of downturn the pain points have changed and hence offerings has to be changed to match the pain points – what worked when the economy was good won’t work now when the economy is down and vice versa. He even gave an instance at his company where he changed the model from license to managed services and now it is not only highly profitable but a longer lock-in of the client.
Sudhir talked about how he has advised across his portfolio companies to cut costs across compensation (20% to 40%), rentals (almost 30%), travel (15% to 20%), and general operational costs. He even suggested preparing a monthly cost projection to get a better idea of the upcoming costs. Some of the new product development plans have been shelved or postponed and at few other places, they have broken down the complete offerings into modules and cost of such break-up modules have been more expensive and in a way they are able to bring about revenue augmentation even in these tough times.
Pannindra talked about how recession has not hurt him much as they are a young company and also since their focus is mainly domestic market and into transportation and not hit much but still they have taken the cost cutting route just to make sure they are prepared.
Overall the message I got was that all of them have all done layoffs and it is “the way” to cut costs and cut flab, and total overall cost cutting was “the mantra” for survival. The other point that came across was to listen actively to market and customers and customize the offerings and the business model accordingly. They also discussed about how to be compassionate and sensitive to the people who were let go and to be honest and frank to the employees on the whole process so that the rest of the team won’t get de-motivated. Surprisingly no one talked about why the recession has happened or about the volatility in the market and how to deal with that or on why the flab was added in the first place. There were no takers for NRN’s mantra where he said that there won’t be any layoffs nor going back on the commitments of new college hires but instead he proposed huge pay cuts top-down. No one talked about how long they expect the recession or this slump in the economy to continue. Some of the critical questions I thought which never came up were - what happens to companies who didn’t built the cash reserves? Is this a good period for M&A? Building flab during good times – was that a mistake or we need to react as the market moves? What new opportunities are coming because of recession or is it none? Is cost cutting the only way to deal with recession? Any differentiation between Indian market and overseas market and does it help to look inward as most were looking always overseas? One of them suggested that it is easier to layoff than cut salaries because it is easier to communicate layoffs (private and one to one) rather than telling all there will be salary cuts across the board as it has to be communicated to all and questions arise where as in the former you say something and send them home – duh? What was that? I was shocked to hear this but I guess this is how things work I guess 
Overall I was not really impressed with the speakers or the line they towed – all they chanted was to cut costs, do layoffs and then be sensitive with the employees who were let go and even how to cut costs (travel, rent, salary etc etc). Only encouraging point was from Ganesh on how they have customized the business model to suit the recessionary times. Sanjay did a good job in moderating the whole event. This is just my opinion and don’t judge with just my opinion but I am sure many budding entrepreneurs would have gone home after the session, thinking who to layoff the next morning!!!!
Manjunath M Gowda, S7 Software
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