Phil Fersht [00:05]
Thanks, Mark. Great to have you on here, Anand. And just for the benefit of people watching this who might not be so familiar with Xebia, maybe you could just give us a quick intro into who you are and your company, your expansion plans, and what you’re looking to do.
Anand Sahay [00:25]
Well, we are about a 21-year-old company now. We pretty much started in the Netherlands, and we were an architecture consulting firm, and then moved into more software development. Very early on, we were very clear about what we wanted to do as a company. We wanted to build a company on a clear vision of being an authority in the areas of technology we work in. So that’s the basis on which Xebia was built. And today, 21 years later, we are almost 6,000 people worldwide. I think we built a great company with a very strong engineering culture. We believe in the idea that services companies need not always be about building volume; it’s about building impact and giving something which customers would expect from a very product-led or product-mindset firm — with the right software engineering practices, building something which can scale, something which has resilience around it. And I think in these 21 years, as the world transformed, it sort of moved in our way, because the things which are so important today are the things which we have been talking about for 21 years. So we are in a very happy state of mind.
Phil Fersht [02:15]
And you were originally founded in Holland, right? You’ve got a big Dutch heritage before you expanded. Can you talk a bit more about the growth?
Anand Sahay [02:15]
Yeah, so we started in the Netherlands in 2001 and expanded from there into other European countries, moved into India for building the scale, because it’s very difficult to build quality software without having the right manpower, and we felt India was a great place. And then from there on we went into the US, we went into the Middle East, Southeast Asia, so now we’re pretty much a global company. And recently, as early or as late as six months back, we moved our headquarters to Atlanta in the US. So we’re shifting the base, but from the heritage perspective, it’s a Dutch origin.
Phil Fersht [03:16]
Yeah. OK. And you’re very much in the gig working space for technology. How’s that changing as a role? Because we’ve seen a lot of these staffing firms appear, a lot of specialist firms appear. What is it that clients want and how do you address their needs?
Anand Sahay [03:39]
Well, again, gig culture — and if your question is more towards the freelancing culture, we never believed in that, to be honest. We have always believed in having Xebians, people who we find and select after a lot of hard work. I think this whole tech, the gig culture, is also a phenomenon which was traditionally always there, but at some point in time the best of the best people thought that they could become freelancers. But what I saw lately, in the last five years, as the demand for technology increased, people with even average mindsets were also trying to get into this freelancing. And we have never succeeded with it. Our culture has been to build our own people, hire our own people, and then deliver.
Phil Fersht [04:42]
It’s very interesting, this shift. We saw the same in the analyst industry, where a lot of analysts went independent. It’s one thing when you’ve got a really good one out there, but when you start to get the mediocre ones out there and selling themselves, it can get fairly dicey. So it seems like the market conditions are shifting every two to three months right now. We had a great resignation coming end of last year, beginning of this year, lots of attrition. That seems to be slowing, and now we’ve been staring, particularly in Europe, at some really worrying inflation levels. And as we go into 2023, we see a lot of enterprises demanding contract renewals at pre-inflationary prices. But they have the same people problems that we all do. I mean, we’ve sat through so many client summits and roundtables where the number one topic of conversation is dealing with people complexity, dealing with hybrid work at home and all that sort of stuff. But what’s going to happen as we move into next year when clients aren’t willing to spend more money, but the cost of labor is going up 30, 40% per person? How do we survive, and what do we need to change about the commercial nature of relationships with clients to keep moving forward?
Anand Sahay [06:04]
I think the way we are looking at it is having conversations with customers as well as our own employees. If you have built a good culture, people want to stay with you, but at the same time it bothers people when the inflation is now — especially in Europe, 16%, 18% — everybody is bothered. But I think, having the right conversation, you have to make sure that you give the right salaries to your people. At the same time, people also understand that this may not be the norm, that this kind of inflation may not be forever. So there has to be some kind of middle ground there. But customers should also realize that if you want the best talent, you have to come out with better prices. So currently we are having those conversations with the customers rather than coming to a conclusion. And luckily I see that even customers have a very good understanding of what’s happening, but it’s something to watch for in Q4. Q1 will tell the real story, to be honest.
Phil Fersht [07:11]
Yeah. I mean, are you being more selective with the clients that you’re working with because of the nature of demands, where if the client has a very cost-reduction-driven mindset but they’re not willing to look at outcomes and data quality and things like that? Are you being more selective about who you’re working with, and why?
Anand Sahay [07:34]
Yeah, absolutely. In general now, or even historically, we have been very selective on our customer base, and we primarily try to work with customers who are on a transformational journey, where they’re really looking at technology as a differentiator. By and large, the kind of customers and the people we work with in that area are aware that for them to get that differentiation, they will have to pay a little more, but also get a value which far exceeds the rate increase which we are asking for. We are typically not into maintenance and those kinds of function areas where usually people are trying to reduce costs, so for us the problem is lesser.
Phil Fersht [08:02]
Interesting. So what are the skills that you’re focused on that you feel, one, give you a real differentiation in the market, and two, are where you’re moving with clients in terms of demand? What is it that you’re really doubling down on at Xebia?
Anand Sahay [08:41]
So we have a very clear idea of the areas where we work in. For example, we are very strong in data and AI, with almost 700 data and AI professionals worldwide. And as you can imagine, this is going to be the biggest shift as we go along, and more and more data innovations will be required. So that’s one area where we are very focused. The second one is cloud. Everybody is on cloud now, but the question now is how do you further optimize cloud, how do you bring innovation in cloud? Again, this is an area where we are very intense, and across all three major clouds we are very strong, one of the top partners worldwide. That’s the second big area. The third one which we have really picked up, Phil — and I also saw you talking about it — was low code. That’s one area where we are becoming more and more bullish. We have been a company of pro code forever, and as we started working on different kinds of use cases and then started researching more on the low-code side, we have really gotten deep into low code, especially in conjunction with high code. So we don’t see low code as only low code. We think any innovative application or software will require both high code and low code. So hybrid architectures are becoming a norm, and that’s the area we want to push along. So that’s another big area. Obviously software development using functional programming, using the whole Golang space with highly parallelized systems, is something which is really crucial to us, and that’s where we are growing a lot. And finally, a lot of focus is also on transformational practices. For example, we realized that unless you are able to talk about the right way of working, agile ways of working — there are different flavors of agile — how do you innovate with enterprises on some of these ways of working, is something that we are really focused on.
Phil Fersht [10:56]
Interesting. And which industries are you seeing more demand for this sort of more transformative work, where they’re looking to change the underlying data structures of what they’re doing and the whole business model, and how do you support that? Are you seeing specific spikes in different industries, or is this across the board?
Anand Sahay [10:56]
I think it is across the board, but I find more intensity in banking, insurance, retail. They’re really talking about it, and not only talking about it — they’re serious about building a large program around it, and that’s where we are also very focused. We are big on the BFSI space, building digital banks around the world. Data-driven digital banks are going to be the future. There are also insurance companies. So I think that’s where we are really focused, but I see it across the board. You talk to anyone, but the intensity is highest in the BFSI, I guess.
Phil Fersht [11:52]
Yeah, we’ve seen a really rapid move to digitalization during the pandemic, in particular with the banking space. Other industries like insurance seem to have moved a bit slower. Do you think, as you look at the current demand out there, we’ll see even more rampant demand in 2023? What sort of environment are we moving into as you look at these economic headwinds? We’ve got this war in Europe. The US economy is not quite as affected. What do you think will be driving your business in the next six months?
Anand Sahay [12:29]
To be honest, Q4 historically has always been a little tapered. So I still have to see a real sign that something will drastically change in terms of digitization next year. We are also watching it, but the programs which have started — the demand, or the questions and discussions we are having with our customers who we have been discussing with — they are on full throttle. Off and on you hear, yeah, let’s see, but I am not currently seeing a real signal other than a lot of newspaper reports and a general Q4 tapering.
Phil Fersht [13:11]
OK. That’s very interesting. And the increase in wages, and how that’s impacting industry — are you seeing a slowdown at the moment in terms of people jumping around jobs? Is that changing at all in recent months, or has that continued to be a big issue?
Anand Sahay [13:33]
I’m really hoping it happens. I do hear that now the jumping will reduce, but at the same time, the kind of talent we have been working with is very selective. I think they will always have huge options to go anywhere. So I think we have to be focused on our people like we have been. But by and large, we haven’t seen any number-wise change in a big way to really make a comment there, but I do read that in a large size, the attritions are beginning to reduce.
Phil Fersht [14:07]
Yeah, that’s exactly what we’re seeing and hearing, and expect to hear more announced in the coming weeks. So that’ll change the nature of the industry, right, in terms of maybe an industry that was a little — I hate to say it — fat and happy coming off that bounce after the pandemic. And now we have a different industry we’re into, which is facing recessionary pressures, but this dire need to look at cyber and engineering and things like that. So it’s an ever-changing market that we’re fighting. As you continue your expansion plans in the States and that sort of thing, what are your biggest challenges to meet the growth targets that you’ve set yourselves?
Anand Sahay [14:56]
Well, finding people — finding the right people, let’s rephrase. I think that’s the biggest challenge, and that’s one of the real reasons for us to expand into new countries. For example, we just opened in Colombia. We are very intently watching to move into Costa Rica, so a lot of research on those fronts is going on. We have a large center in Poland, actually three development centers in Poland. Now we are looking at Romania and Bulgaria. We opened Vietnam about 1.5 years back, and we are intending to further expand it. So it’s all about people — wherever there is the right talent, I think we’ll set it up. That’s the expansion.
Phil Fersht [15:42]
That’s great. I really think your European footprint’s going to be very strong for you as we fight through this economic time. And countries like Romania have been fantastic with their talent development and skill sets in recent years. Anyway, it’s been great having you on here and really getting to know your firm, and hopefully in 2023 we’ll see continued success, and maybe have you visit some of our summits as well and meet more of our clients. But I really appreciate your time today.
Anand Sahay [16:13]
Yeah, thank you so much, Phil. Thank you.
