Alok Aggarwal: I basically came to the US in 1980, did my PhD in computer science in Hopkins in 1984, joined IBM’s Research division in 1984 and then was there for 16 years; I started IBM Research Lab in Delhi, and became the director in 1997. This was the time that dotcoms were taking off, so one of the strategies was that we should open a lab in India because we were losing researchers to dotcom start-ups in the US. So I was given the charge to open a lab in India and in 1998 I moved with the family to Delhi; I started the lab in April 1998 and grew it to about 35 PhDs and 35 Masters.
Marc Vollenweider: I’m 100% Swiss, graduating as an electrical engineer with the Swiss Federal Institute of Technology in Zurich. Then I joined McKinsey as a greenhorn, as a business analyst; I spent a year at McKinsey – this was 1990 – then in 1991 went to INSEAD in Paris for my MBA. Then I rejoined McKinsey and stayed in Switzerland and got elected partner in 1998. Then in 1999 I moved to India with McKinsey as one of the partners in the consulting practice, where I was in charge of the healthcare practice and lots of other stuff. And then I also got the responsibility for the so-called McKinsey knowledge centre, which at the time was an initiative led and pioneered by Rajat Gupta, the then global head of McKinsey.
The goal there was essentially to come up with a research hub that would support the consultants around the world with high-quality quick research. So say you had a question – how many companies were there with these and these criteria – you’d send an email to India and some busy bee worked on it and sent back the answer in a ZIP file and then in the morning you’d come back to the office and you have the answer ready for you. We started out from an initial team of 12 and ramped this up to 120 MBAs between the years 1999 and 2000. And this was a pure captive, only catering to McKinsey internally. And then it became clear to me that this could be an interesting third-party business model, so that’s why in March/April in 2000 I started thinking about setting up my own company.
AA: We met, interestingly, because of a birthday party for the kids, who were going to the American Embassy School in Delhi. This was, I think, early May 2000. When we started talking we realised that he was thinking about one aspect of research and analytics and I was thinking about another aspect; so, why don’t we create a company that provides all kinds of research and analytics services and other high-end services related to having knowledge expertise? So we both met several times during that period – July/August 2000 – and quit McKinsey and IBM in November 2000 and started Evalueserve (which stands for “evaluation services”) in December 2000.
Q: When you set up by yourselves was there any McKinsey money involved?
MV: No, there was a clean cut. Alok and I put in the money, our own money, and there is no institutional money from McKinsey. We’re privately held, and we hold the vast majority, and then we have a Swiss private equity investor, you could call him a super angel… So during the initial years 2001, 2002, 2003 we needed some money to grow because we turned profitable in 2002, which is actually pretty good, but still if you then grow at a rate of 100% the single biggest capital consumption item is actually not office space or computers: it is accounts receivables. Because you essentially prefinance your revenue; because the cost of people on your balance sheet, they’re there but you don’t get the revenue. So you need to balance that and then you grow at 100% and you need some money, even though you’re profitable. So we picked up some money in very small slices and we had five mini-rounds – maybe even micro-rounds, you know, $100,000 here, $100,000 there – over the course of the next five years. We haven’t taken up any money since 2005.
AA: Seven and a half years later, we are about 2,500 people worldwide. Out of these 2,500, about 60 of us are client catering engagement managers; so we do business development, we do sales, and with the right hand we hold our clients and with the left hand we hold our professionals in our back-end research centres. Because we are very involved in client delivery and client management, all 60 work out of home offices; we have about 28 in the US, two in Toronto in Canada, about 25 in Europe of which 11 or 12 are in the UK, with the UK being our second-largest territory from a sales perspective. Then we have one in Shanghai, one in Hong Kong, one in Singapore, one in Australia, and one in India. So that’s roughly our team of about 60 people.
Our back-end offices, which are really bricks-and-mortar offices, are in China, Romania, India, and Chile – so rather than “BRIC” we call them “CRIC-and-mortar”… India was the first one that we opened in December 2000; we currently have about 2,130 people in India. China was the second one, with 160; we provide services in Japanese, Chinese and Korean languages and related knowledge services out of there in these three languages. In Chile, we are based in Valparaiso, about 45 minutes from Santiago; we provide services in Spanish and Portuguese from there, and we cover the Latin American market as well as the Hispanic market in the US, which has been growing quite rapidly – it’s about 10% of US GDP right now and is expected to double in the next 20 years. This helps us not just in covering these languages and various countries and cultures and customs; this also helps us in providing 24/6 average because rather than people working during night-time in India or China, we’re able to transfer – in a smooth manner – work to Chile.
Romania is particularly interesting for us because the place where we are, Cluj, is a university town with quite a few people who speak German very well – so we will be able to cover Germany, Austria and Switzerland quite well. Also we can cover Eastern Europe, in particular Russia, Ukraine, Azerbaijan and so on, Romania itself, Poland, Hungary; that area is growing quite rapidly with the oil outflow from Russia and some of the other eastern states, and hence expected to do very well. So with that we are basically providing knowledge services, most of them are research and analytics, some of them are middle-office work, but all are knowledge services for banks, pharmaceutical companies, healthcare, technology, media, telecom, and so on.
Q: What do you think have been the biggest challenges you’ve come across during the life of the business, and how have you managed to get past them?
MV: I think it’s fairly straightforward. These 2,500 guys need to be busy. Marketing and sales, that’s the single biggest challenge, always; initially – we call it the “double chasm” – initially when we went to meet people we went in and said “hi this is Evalueserve”, and they said “oh, so you want me to outsource my strategic research?” And this was chasm number one, because nobody had done this before: it was a completely new concept; nobody had any idea that this could be done. So that was a huge hurdle.