Apar beats slowdown with EDC model

“Competition today is not between different products it’s between different business models,” says management consultant Gary Hamel. True to this philosophy, Apar Technologies has perfected a business model that ensures multi-fold growth. Chitra Padmanabhan reports on the company’s unique endeavour

Apar convinced customers that carrying out part of their development work in a remote destination would result in significant cost savings, says Sanjiv Maheshwari

For those who perceive Maslow’s ‘self-actualisation theory’ as just another management jargon, need only to look at Apar Technologies to dispel this notion. Apar’s 100 percent growth rate during a phase when others were barely managing 20 percent is a self-actualisation of sorts. A solutions-driven company, Apar has been able to double its employee count and added approximately 15 customers to its kitty since last year.

From chaos comes clarity

The company was formed in late 1999 but soon found itself struggling to cope with the tech slowdown. This forced it to change its course from aspiring to be a strategic player to merely doing its best to survive. It was then that Apar had to drastically alter its long-term plans to adapt to the current scenario. "During this time we found that in order to survive, we had to identify a niche area, the target audience and earn reasonable profits," says Apar Technologies’ CEO Achyut Godbole. Medium-sized companies were finding it difficult to differentiate themselves from the rest and struggled to survive. Apar followed a different strategy to tackle the slowdown.

The company’s punch line ‘Small enough to know you, large enough to serve you,’ today stands as a testimony to the fact that though it cannot be compared to a large player in terms of size, it enjoys a technological edge. On the driver’s seat is CEO Achyut Godbole, who feels that close interaction with customers has been the company’s USP. Unlike top rung companies, who deal in huge volumes, Apar’s size has been a great advantage in forging close ties with customers, he says. The company has been certified recently for SEI-CMM Level 5.

Apar’s solution offerings

Apar is primarily a solutions company, spread across various verticals like banking, manufacturing, retail, logistics and telecom sector. In addition, the company has packaged solutions in areas of ERP, CRM, SCM and a host of EAI applications for the enterprise segment. In order to help companies plan their content on the Internet or the Intranet, Apar also has a content management solution. "Companies today are looking at uniquely presenting their content. In order to cater to this need we have developed a packaged solution for content management in alliances with ATG, Broadvision and Vignette," says Godbole.

The company’s innovative edge is reflected through its specialised solutions like ‘digital wallets’, which facilitate online transactions. The digital wallet is a single interface through which a customer can make credit card payments (B2C payments), business payments (B2B payments) and mobile payments through devices like PDAs. Other specialised solutions are in the form of payments framework, security solutions and mobile applications. Apar’s key clients include ABN Amro Bank, Deustche Bank, Accenture, Cap Gemini Ernst & Young, JP Morgan, Citibank and Cisco Systems.

A peek into the past

Apar Technologies is the Indian subsidiary of Apar Infotech headquartered in Pittsburg, US. Apar set up its India operation in late 1999. The prime business plan during its formation was to provide its clients with cost-effective solutions.

"To start out, we wanted to convince our customers that carrying out part of their development work in a remote destination would result in significant cost savings," says Sanjiv Maheshwari, the company’s vice president for worldwide operations. Consequently, Apar also cashed in on the fact that its customers worldwide were going on a cost-cutting spree and were beginning to realise that working in a cost-effective destination would keep their costs under check. The company began its India operations with its first centre in Bangalore.

In the initial stages, Apar refrained from pitching to domestic clients since the company wanted to consolidate its offshore activities.

However, Apar was not comfortable with the idea of positioning itself purely as a cost-effective centre but rather as a company that would provide tremendous value-addition in terms of technology. Thinking on these lines, the company worked upon a business model that enables product companies to establish a full-fledged development centre in India. Apar’s target audience included those companies who were looking at outsourcing as a strategic initiative rather than a cost reduction exercise.

In tune with its core idea, the business model was termed as EDC (extended development centre) and Apar worked around its infrastructure in such a manner that US and UK-based companies could set up their development centres at Apar’s premises. This was a bold initiative for a medium-sized company like Apar, considering the fact that a high-trust environment was the first and foremost prerequisite for product co-development.

According to ACHYUT GODBOLE, unlike top rung companies, who deal in huge volumes, Apar’s size has been a great advantage in forging closer ties with customers

Apar approached its existing customers to understand their willingness and inclination toward such a proposal. "Though we had done a lot of on-site work for our US-based customers, we still had to find out their response to such a model. A win-win situation for both parties, it was also an acid-test of faith our customers had on us," says Godbole. To facilitate this process, Apar employees created an EDC handbook that explained the purview of the software development activity. The handbook provided a clear-cut dimension of development work that would be carried on through the EDC model. The model also ensures complete autonomy to the clients right from the recruitment stage.

After sustained efforts to pitch the EDC model to customers, Apar struck an alliance with Indus in early 2000. In alliance with Indus, Apar carried out work in the EAM (enterprise asset management) space. After the success of this project, Apar carried out many other complex assignments based on this model. The company has currently set up an offshore lab for Cobalt Group, which provides e-business solutions for the automotive sector. The lab is specifically dedicated to the co-development of Cobalt’s J2EE-based suite of offerings for the automotive sector. Cobalt Group India’s presence in Apar’s Bangalore centre is its fourth lab and first outside the US. Apar today has hosted seven extended development centres running on its premises.

Tracing Apar’s growth

Being a late entrant in the Indian IT scenario, Apar has managed to grow in leaps and bounds even during trying times. "A well-defined road-map for the company coupled with an enviable international client list has helped us rope in a host of domestic customers as well," says Godbole. In terms of revenue, the company has registered a growth of more than 70 percent from Rs 23.4 crore in the year ending 2002. The current revenue figure stands at Rs 40 crore. Consequently, it has gone on a hiring spree, with an addition of approximately 300 employees since last year.

The way forward

Going forward, the company intends to achieve greater penetration in the European and American markets by showcasing the success of the EDCs that are currently hosted in India. The company also plans to extend its partnerships with various companies in the CRM and ERP space, thereby offering a broader range of services like business intelligence, etc. "What motivates us to further extend our operations is a ten-fold growth in offshore strength," says Godbole.

In these trying times when even the top-rung players are reporting sluggish performance, Apar has managed to achieve appreciable growth. The company forecasts a target of Rs 50 crore for the year ending 2004. With a renewed focus on offshore business, the offshore to onsite revenue percentage is expected to reach a ratio of 25:75 as against the current ratio of 10:90.