“The finance community has to network more to bring more value to the company.” – Srinivasan G, CFO, CMS IT Services
Over the last decade, banking and financial institutions around the world have reimagined their businesses by embracing technology-intensive solutions to cater to the ever-evolving market. While the mobile internet and device penetration has undoubtedly played a part in recent years, a lot of India’s tech industry has come from the information technology boom and the subsequent rise of IT services giants like Infosys, Wipro, TCS, and others.
Today, the startups tapping the digital transformation opportunity in the enterprise tech space are standing on the shoulders of these giants in many ways. And the visibility for Indian IT services giants has made it possible for other businesses in this sector to showcase their technology to the world. Mid-market and small IT companies such as Mphasis, Mindtree, CMS IT Services among others are leading the next generation of IT services innovation in India, banking on disruptive, cutting-edge technologies and processes.
Founded in 2014, CMS IT Services operates in the domain of managed IT services and system integration. It combines cloud, digital, automation and cybersecurity expertise on a single platform to help companies leverage optimal technologies for efficiencies of scale.
Its repertoire includes cloud assessments and migrations, application digitisation and modernisation, digital experience enhancement, information management and cybersecurity, IT automation and product development support.
Aligning Financial Strategy With The Tech Vision
Given that it is a small-sized company in comparison to the IT services giants and still privately funded, one of the biggest challenges for CMS was managing financial affairs and bringing sustainability to the operations. This allows the smaller companies to compete aggressively in the market and much of the credit goes to the top finance leadership and the team.
CMS IT Services CFO Srinivasan G says a financial chief is as much responsible for the strategic vision of the company as they are for the internal and external financial processes. Often, this means having the knowledge and skill-set outside the financial domain and about business strategy, competition knowhow and market research. The goal is to manoeuvre the company in taking less risky and more rewarding decisions in every way.
An industry veteran, Srinivasan has been leading the finance operations for CMS IT Services since 2018. Under his watch, the company has increased the gross margin on its services from 6% to 17-18% in the last three fiscals, despite hitting a speedbump because of the Covid-19 pandemic.
According to Srinivasan, the mantra for attaining success in the financial role is simple: the devil is in the detail.
Small changes in streamlining workflows and processes tend to yield big results while creating definite processes for pricing, contracting, and transactions and cutting down on travel expenses helped the company increase its cash reserve significantly, he told us. A CFO’s role needs to be a lot more customer-facing and towards ‘solutioning’. It’s also about advising the top leadership within the company and its partners to balance both sides of the equation.
From IT Giant To A Small Company — The CFO’s Journey
Srinivasan has derived these insights from his stints at top IT services corporates such as Wipro in different business areas. From 1994 to 2018, he worked at Wipro in the cost accounting, consolidation and disclosure departments and the company’s South Asian and Middle Eastern wing, which involved liaising with accounting and audit giants such as KPMG, McKinsey and BCG. This network has proven invaluable for CMS’s growth and financial stability, according to the CFO.
But it was not easy to shift from a giant MNC such as Wipro to a comparatively smaller company like CMS IT Services. Srinivasan recalls that at Wipro, he always had the option to consult senior professionals for advice and guidance, but there’s no such cover in a smaller company. At CMS, he needs to make the best use of his connections and offer a perspective to the leadership that allows even a small company to perform considerably well, financially speaking.
Today, of course, CMS competes with the likes of Wipro in many ways in the digital transformation space, which is fast seeing developments from IT services giants.
Highlighting the differences and peculiarities of smaller companies, Srinivasan added, “There is always a cash-flow pressure, and one needs to be prepared to tackle it. Hence, make sure to have a rotating working capital, then pick up long-gestation projects which could pose challenges.”
The challenge of having direct responsibility of the complete financial operations and being a hands-on professional motivated him to take up this mission. Within three years of him joining the company, CMS IT Services executed deals with clients such as Sony, Excide, HBP Financial services, CRISIL, CocaCola, HDFC Bank, Bharti Airtel and Pepsi, thanks to the financial infrastructure and vision that the CFO’s team created.
Speaking about the key decisions in the journey, Srinivasan said it’s often about knowing what deadweight to shed, rather than where to cut corners. He encouraged the corporate leadership of the company to hive off CMS IT Services’ printing business, as it was neither strategic nor core to its IT services bouquet. This allowed the company to save on depreciation as well as employee costs and brought the focus on the core revenue and business.
Having raised funding from investors, CMS IT Services is looking to list publicly with an IPO target of 2021. Currently, private equity investor Mathew Cyriac holds 49% of the company’s shares along with Aarti Grover holding 25% and Crest Ventures having 11% stake. The remaining 13% belonging to the ESOP programme and the top management, the CFO added.
The CFO’s Network Effect
Srinivasan believes that the adoption of rigourous financial discipline is key for most big companies. At the moment, his chief focus is on building a decent cash reserve for the company before it looks to expand abroad and target more clients, which would be more cost intensive. To go international, a company needs a stable, reputed partner or alliance for which it needs to have sound finance, Srinivasan said, indicating how the chain of expansion and scale is also linked to the finance operations.
“The more you network with banks, customers and partners and create alliances, you can bring more value to the company and to your role. Also, understanding the new complex demand, de-risking the company and pursuing new opportunities with caution will lead to substantial growth,” he emphasised.
With technology emerging as the game changer, the transaction time for deals and trade has reduced, hence value-addition in existing services has become a necessity, which naturally keeps shifting the cost structures. Shifting to an innovative pricing model to remain competitive, finance executives need to make best use of data by interpreting analytics. Like Srinivasan suggested, CFOs can no longer avoid the areas that are not their specialisation and a strong network is key in achieving this well-rounded skill set. Getting more involved in the strategic direction is necessary for every new-age CFO.