Sapient's Indian Reincarnation

Posted by: Manjeet Krpalani on August 9, 2006

Remember Sapient? At the start of the decade, the Cambridge, (Mass.) based E-consultant and IT service provider had gone from dot.com hero to zero and looked likely to join other Web 1.0 flameouts such as Razorfish. Well, Sapient came close but managed to reinvent itself. It shifted a big chunk of its operations to India, while refashioning itself as an offshore consulting firm as well as a web support and maintenance specialist. From a loss of $189.8 million in 2001, Sapient managed $26 million in net profits last year on $328 million
in revenues. That’s a performance that led IT research firm Forrester to dub Sapient “The Comeback Kid” in a report last year.

Back in 2002, Sapient Chairman Jerry Greenberg and co-chairman Stuart Moore shifted the majority of the firm’s operations to New Delhi and Bangalore. The company slashed 30% of its 1,500 employees in the US, and dispatched 50 senior executives to New Delhi to set up a new operation. I remember then, everyone in India thought Sapient had made the classic mistake of sending expensive expats to run India, a sure way of eroding the country’s low-cost advantage. But the millions spent on the move, says Soumya Banerjee, chief executive of Sapient in India, “was the best investment we ever made.”

Sapient didn't send all the top tier execs: it sent a vertical slice of its management and business units. For instance, it sent a bunch of directors of business units, along with their senior project managers and senior associates. These execs hired locally, even kids straight out of college. So when they started new projects, "we seeded them in India," explains Banerjee.

Those original 50 US execs have since left, and the organization’s structure has changed dramatically with more local talent. About 54% of Sapient’s employees are now in India, though the company also has operations in Canada, Europe and the UK. Of the top dozen company execs, most are in the US, while two are in Euorope and one in India. "We are
globalization, truly," Banerjee says.

And Sapient has changed its business model some. It has pulled back from Internet-consulting and systems integration and focused more on less glamorous things like
Net support and maintenance work. That’s an area where Indian companies excel, of course. That's now about 25% to 30% of its total global business, and Sapient no longer turns its nose up at it. But the company is moving ahead too, building higher end web-based applications for clients, mostly financial companies and power operators. The idea is to help them use the Internet efficiently to get better returns on their investments.

For Dutch power company Essant, Sapient reengineered the processes which delivered real time energy trading information to company traders, and automated them, helping the company increase the return on its investment in the system very quickly. And it put all of MIT's coursework online, via a web-based publishing system so it gave free, searchable access of the course materials to anyone anywhere in the world.

Sapient doesn't do work for any Indian companies yet, but hopes to snare some deals given that Indian companies are becoming more Net-savvy. These days, Sapient sometimes bumps into big boys such as Accenture and IBM. Next focus: Sapiant wants to help clients “analyze how much their spending on the Net is getting them in real dollar terms," says Banerjee. Sapient's US employees sell the space on the Net, and they leverage their India employees to do the creative tech work like designing the pages users see and tracking user behavior. It's what Sapient feels is the perfect hybrid model - 50% India, 50% USA. Says Banerjee: "If we didn't have India, we'd have been finished."

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