HFS Highlight: Birlasoft is unlocking the power of digital through its eight pillars of growth

Birlasoft has been a well-known mid-sized technology services provider which is part of multibillion-dollar diversified CK Birla Group, with its 10000 engineers. It has delivery centers across India, the US, LATAM, and Europe with offerings in the domain of Manufacturing, Banking and Financial Services, Insurance, Life Sciences, Energy & Utilities, Media & Entertainment, and Hitech industries. In 2019, the merger of KPIT Technologies Ltd’s IT Solutions & Services business and Birlasoft (India) Ltd was completed and the new entity is named Birlasoft. With the new merger, Birlasoft clocked a US$ 464M revenue run rate in FY 2020 and targets to become a billion-dollar-plus organization (in terms of annual revenue run rate) in the next 5 years.

In December 2020, we attended the Birlasoft analyst and advisor day to know more about its overall strategy, key capabilities, and flagship client engagements among others. . Throughout the discussion, Birlasoft unveiled its strategy to fuel the next phase of growth with some interesting examples of client engagements and key solutions.

Birlasoft has identified eight pillars to fuel its growth

Birlasoft has developed eight pillars that will help streamline the business and achieve sustainable growth of the business as described in Exhibit 1.

Exhibit 1: Pillars of growth for Birlasoft

Source: Birlasoft

• Deeper alignment with the strategic customer: Birlasoft has reduced active client count from 401 in FY 2019 to 378 in FY 2020 and 310 in Q2 FY 21 which is in line with its strategy of cutting down the tail and non-strategic account over a period.

To support its client-centric strategy, it has come up with a challenger framework with the top 50 clients and now has increased the same to 150 of its clients where it engages with them to establish a deeper connection and build a long-term strong partnership. It is also focusing on its tail accounts by either divesting or upselling, thus optimizing non-strategic business and tail accounts.

• Focus on cross-selling: Cross-selling existing and newer offerings to its existing customers to deliver end-to-end integrated transformation have been a key strategy for Birlasoft to increase revenue growth from existing accounts, resulting in deeper engagements. Overall, this will help Birlasoft with its annuity revenue which will play a key role in reaching a billion-mark revenue thus making it one of its most important growth strategies.
• Outcome-based structured deals: Birlasoft follows non-linear pricing models (for example, revenue linked, outcome-based, XLA based) for its several clients. For example, it is engaged with a large global life science company through an innovation linked business model. It leverages customer revenue linked business model for a US manufacturer.
• Focused influencer strategy: Birlasoft is planning to leverage the ecosystem to build a robust marketing strategy. It focuses on different thought papers and collaborates with research and analyst firms to bring out its client success stories and key capability narratives.
• Focus on innovation: Birlasoft has built an innovation ecosystem (collaboration with start-up companies, academia, and ISVs among others) to speed-up innovation and co-innovation. It also opened experience centers related to different industries such as manufacturing, Pharma, Medical devices, Healthcare, and Insurance, enabling speed of innovation, future-readiness, cost-effectiveness, and co-innovation. Birlasoft has also co-developed some cloud-based platforms across these industries, which it expects to spearhead the growth and development of non-linear revenue streams
• Micro vertical strategy focus: Birlasoft is following a vertical-focused strategy that includes manufacturing, life sciences, BFSI, and energy & utility sectors. It is also exploring specific niches or micro-verticals like Medical devices, construction & building materials, P&C Insurance, and logistics companies within industries to grow its overall business.
• Specific horizontal growth levers: Birlasoft has been focusing on its horizontal areas such as Cloud, Data & Analytics, Automation, testing, and enterprise software (for example, ERP, CRM deployments) among others across its focused verticals. It is also working on emerging technologies such as 5G, IoT, and blockchain offerings.
• Focus on the vertical solution: Birlasoft has been investing in industry-focused platforms and solutions to solve business problems. Some of its key solutions are intelliOpen, intelliAsset, Smart factory, supplier risk radar, Submission automation, Digital surgery, PIV collision avoidance, and WorkWear AR/VR platform.

The organization focus and client-centricity of Birlasoft have started to show results as it signed a multi-year agreement worth USD 240Million with Invacare Corporation, wherein it delivers IT-as-a-Service to the US-based company along with building a new analytics platform and move the Invacare data center to the cloud. This is one of the largest deals in the history of Birlasoft.

Clients praised Birlasoft’s integrity and commitment, resource quality, and technical capability

Several clients of Birlasoft demonstrated the depth of the engagements and the overall role of Birlasoft throughout the discussion. It is engaged with a large American airline for innovation initiatives including customer experience enhancement. The client praised Birlasoft for its high flexibility, commitment, leadership, and work ethic. It is jointly working with a large BPS company to enable digital transformation for an American healthcare player. Birlasoft is engaged with a large semiconductor company for digital manufacturing-related initiatives.

The Bottom line: With an aggressive focus on technical expertise, Birlasoft differentiates against the large and other mid-tier providers in terms of capability

Post-merger, with the newer strategies in place, Birlasoft is on a strong growth path. Avoiding the competition against the large providers in terms of scale, Birlasoft positions itself as a dependable IT provider with exhaustive vertical, enterprise solutions, and digital technologies capabilities.

With the increasing focus on productization and vertical-specific solutions, Birlasoft holds the chance to challenge the bigger IT services firms in the near to long term.