ISG Imagine Your Future® Podcast – Episode 26: The Persistent Power of Digital

In this episode, ISG hosts Steve Hall and Karen Collyer talk to Sandeep Kalra, CEO of Persistent Systems. Together they discuss some of the post-pandemic economic trends impacting businesses: the Great Resignation, talent acquisition and retention, environmental sustainability and more. Kalra also shares his perspectives on how Persistent Systems remained resilient through the pandemic, achieving impressive growth over the past year. Listen in as he shares his experience of leading during the pandemic and the lessons he learned from the crisis.    

Transcript

Steve Hall

So, welcome everyone to ISG’s Imagine Your Future podcast. I'm Steve Hall and with me today is my co-host, Karen Collier.

Hey, Karen, how are you doing today?

Karen Collier

Hey, Steve, I'm well, I'm happy to be here for another episode.

Really, I think I'm still processing one of the last discussions that you and I had, where we were talking about things like technology is a monster and surveillance capitalism and like the geopolitics of cyber security. And I think that our guest today, Sandeep Kalra, who's the CEO and Managing Director of Persistent Systems might just have some insights for us on these topics and others that he'd be willing to share.

So welcome, Sandeep.

Sandeep Kalra

Thank you, Karen. And Steve. Happy to be here.

Steve Hall

Yeah, great. Sandeep, welcome. Thank you so much for joining and you and I have known each other for a lot of years, so really excited to have you on the podcast. I think a lot of people know you Sandeep, but they may not be familiar with the Persistent brand. So why don't you just start off with some introductions and share the Persistent story.

Sandeep Kalra

Sounds good, Steve.

So Persistent has been an organization that was founded about 30 years ago. And for the last 30 plus years, Persistent has been focusing on product engineering, what we would now call digital product engineering. Over a period of years, it also went into enterprise verticals such as banking, financial services, and healthcare life sciences, in addition to the technology companies that we used to work with. To give you an example, we work with the top 16 of the top 20 largest ISVs in the world. And among the top 10 banking financial services organizations, we pride ourselves in working with top six. And similarly in healthcare life sciences, we are a leader in the instrumentation space, the provider space. And we are the de facto partner to people like Salesforce when it comes to the provider space. So, it's been an organization that has evolved over the years. And if you look at the customer base, right from working with cutting edge product development, and disruptors in various industries, to the established organizations is the set of customers that we play with. So, if you are looking at a new bank trying to set up a disruptive play, to a large bank, which is getting disrupted; those are the kinds of organizations that we work with.

Steve Hall

Now, that's great. You never want to be best kept secret in this business. And marketing wants to make sure that we're not. But doing 16 out of the top 20 of the high tech, especially in the engineering space. That's taking off so crazy these days. That's brilliant.

Karen Collier

That's impressive. And I have a couple of questions for you, Sandeep, about how you're maintaining your impressiveness in terms of; how is Persistent managing through what we're seeing right now? Some people are calling it the great resignation. Other people are calling it the great recalibration. We're experiencing some kind of churn around resources post pandemic. And I guess what I want to know is; and it breaks down into three parts: What do you think has ignited this talent shift? What's continuing to fuel it? And how do we manage it in an industry that's still labor intensive? And we're still in need of super smart, super motivated resources.

Sandeep Kalra

So, Karen if we look into the past, technology has been a strong driver for growth for various industries. And if you look at the more recent past, in the COVID times, in these pandemic times, tech industry was a big saviour. Whether it was the development of newer kind of vaccines or whether it was leveraging tech to pivot into new ways of servicing customers. So, whether you were in financial services, healthcare, retail, even education; if you look at how the kids went from being in school to getting to online education, a lot of businesses pivoting to platforms like the one we are using right now to engage with each other. And even things, simple things like people staying at home and getting groceries at home, doing their banking from home, getting health care while sitting at home, to video calls and so on. So, there's a lot of technology usage that happened and that was a big saving grace in these pandemic times. Now, as we are coming out of this, it has given the businesses a whole new thought process of what the future can look like, whether it is the future of work or future of businesses, and that's fuelling a whole new demand for technology related talent. And that's behind part of the thing that we're calling the great resignation, the great recalibration and so on.

And also in these pandemic times, the fact is a number of tech workers or other workers held on to their jobs in times of uncertainty. So now on one side, there is a lot of new demand, which outstrips the supply that we have. On the other side, a lot of people hang on to their jobs, they're seeing this new trend, they want to try new things. And these are the things that are causing what we are seeing in terms of great resignations and so on. Now, how do we hang on to it? Obviously, there are multiple things there. One has to make sure that as an organization within this whole ecosystem, one has to stand on one's employee value proposition. On the other side, one has to look at how do you not just keep on getting talent from one another, but as an industry, how do you create more talent supply in the ecosystem? And companies like ourselves are working on each part of it. So, if we look at Persistent itself, on one side, Persistent has been a great company in terms of doing technology work, which means that the employees get cutting edge work to do. We work with partners like Microsoft, Amazon, Salesforce, and forward-looking technologies. So that's one part of the value proposition. The other thing is within COVID timeframe, we as an organization have seen tremendous growth. Today, we are the fastest growing tech services company that is there in our sector. We grew 34% year on year for the last quarter. So, we have created a significant amount of shareholder value as well. And as a part of our employee value proposition, we have rolled out an all-inclusive ESOP plan for our employees, which basically gives them a wealth sharing plan as well. So, we are working through this in terms of you know, solidifying our employee value proposition, good work environment, good wealth sharing. And last but not the least while we do this, we are also working to create new talent supply. We are hiring fresh graduates training them, we are hiring people from other sectors, training them for the kind of demand that you see on digital skills. So that's our contribution towards making sure, while the great resignation happens, we as a company thrive through this and we as a company also contribute to creating more talent.

Karen Collyer

Okay, I want to pick up on what you were saying about tremendous growth. And I'm imagining; to manage that kind of growth, leadership over the last several years has been critical to your organization. So, what leadership lessons did you learn during the pandemic? And how is that shaping your leadership style today?

Sandeep Kalra

So, the past two years have been very interesting, given the pandemic times, both professionally and personally for me. I took over as the CEO in the middle of the pandemic, roughly about a year to three months back, and I've been with persistent for about two and a half years. So, in this pandemic times, we learned a lot of new things. Whether it was dealing with our own employees, whether it was dealing with customers, whether it was dealing with the society at large. Now, let me take each one of them and the learnings from there. So, when we look at our employees, all of a sudden we went from employees coming to the office, to employees working from anywhere. And we had to support the entire infrastructure, the entire ecosystem, in terms of enabling them and then making sure they were productive, they were healthy. And at times they were pandemic waves going through different geographies at different times. And so not only making sure that the business continues, but on a human level, we were, you know, absolutely challenged to support our employees and their families to the best. In fact, we as Persistent, even, you know, donated $3.3 million from our profits to the different communities and made sure that was utilized at the ground level in the support of various communities that we work in. Now, obviously, that meant it basically gave empathy a whole lot of different meaning when you were dealing with your employees and working with them through all these challenges. On the other side, if you look at customers, all of a sudden, there was no face-to-face meetings, no face-to-face interaction with the customers. Everything went digital. And it was also a lot of uncertain times for our customers. So, while they were going through their own uncertain times, their businesses were challenged, we were stepping behind them to make sure not just business continuity happens. At times, we were, you know, basically being banked upon, while their own, you know, employees were not able to work productively to step up and so on. So, a whole lot of new relationships formed, new ways of working with customers, and new ways of even looking at how you extend your enterprise, your cybersecurity, making sure everything works, is secure, is humming at the best possible pace. A lot of you know, good learnings through this. And thankfully through all this, we not just survived, we were the fastest growing company in our sector. We were very well rewarded by the capital markets as well. We are today at a market cap of over 3 billion dollars compared to a 1 billion dollars about a year and a half back. And this has been very fulfilling, very humbling and this is also maybe a little bit more grounded. And we like to say this, while we work in the cloud, and with the latest technologies, we have got our feet even more firmly grounded.

Steve Hall

I love that quote, Sandeep. That is really good. I reflect on my own leadership a little bit going through the whole pandemic and the level of crisis management that we had to do; and I'm sure similar to you, we were both doing 14 - 16-hour days with just hundreds of issues sort of hitting us at once. And I don't know that anybody's completely prepared to deal with that. But give us a sense, a little bit about your background and how you how you grew into this role and grew in the industry. And how that sort of helped you shape these big moments when, they're very defining moments in our career, but very defining moments you know, in the in the history of our industry and the history of our firms.

Sandeep Kalra

Good question, Steve. So, look, I was born and brought up in India. I spent the first 30 years of my life in India. I moved to the US in 1999. And I've been a part of the software services industry since. I've worked in the Bay Area with the tech companies. I've worked with as an employer at companies like HCL Technologies, Samsung Electronics, Harman Connected Services, which is a part of Harman and then finally coming to Persistent. And over a period of time, worked with very good leaders, whether it was in HCL Technologies, whether it was in Harman and otherwise, and learned a lot from them. And today, as I look at my journey over the last two and a half years, as you know, a leader in a public company; and we are listed in India, it's been the accumulation of working with different cultures, different leaders, different verticals, learning from different aspects of dealing with people. And all of that is what I think, puts me in good stead in challenging situations like the one we faced in the pandemic. Where you can relate to different kinds of people, different kinds of ways they express themselves, their needs, how you empathize with different stakeholders and bring all of this together to work efficiently and you know, deliver a good result as an organization, teaming everyone together.

Steve Hall

Yeah, you're so right. The coaching and mentoring that we both had, and the coaches and mentors that we've learned from, were so critical as we went through this. And I know from my own experiences, it was really hard to talk about one group having it more difficult to the other. And through all the one-on-ones that I was going through; and I think you had similar experiences, everybody had such different experiences to go through whether it was somebody young that was in a small, flat small apartment, in an area that was now their primary workplace, or young families that had young kids, or people in multi-generational things. It just, it was so crazy, how it impacted of all of our situations and the different tools we had to use as leaders to pull everybody together and keep that morale. So, I think it's a fascinating story. Listen, as Karen mentioned early on, this podcast has had some really great discussions. And one of the discussions that we really had on the last several, is really basically just how software is eating the world. Whether it's digital engineering, whether it's the whole digital transformation, whether it's managing transformation in the age of chaos, but as you mentioned, you've got incredible growth, quarter over quarter, year over year. Engineering is certainly growing. Yet you're seeing key growth in other industries. But if you were to look; and I don't want you to do anything that’s going to get you in trouble with investors, but what are the big things that you're just bullish on that are going to drive further investment from the industry? That you really say, you know, these two or three trends are really critical out there.

Sandeep Kalra

So, there are multiple pivots to this, Steve. So, if we look at it on one side, if I was to look at Persistent per se where we play and we see the industry going, there are the tool makers if I was to compare the digital transformation that we are seeing and that will continue for many years to come. So, it's like the gold rush. So, there are the tool makers on one side who provide the tools for this enterprise digital transformation, or modernization. And on the other side, there are these enterprises who use these tools. So, we as Persistent are very actively engaged on both sides. And our genesis is in working with the tool makers, right from the Microsoft, to Amazon, to Google, to Salesforce and many others, where we work on the core product engineering. And when we go to the enterprise, we are helping them adopt these tools, towards new business models, towards driving growth, revenue for other things. And in the middle, there are other stakeholders there are right from people venture funds, who bring the investment into newer technologies, private equity firms, who take midsize companies and help them go to the next level and disrupt the ecosystems and so on. So, if you look at our side of the house, from a technology perspective, we work with the technology companies and on the other side we are working the business model side. Now when you look at the trends we are seeing the banking financial services dabble with; let's say if you're looking at a top tier bank, they're pivoting their investments from physical bank branches to digital banking products. They're going more and more on the digital side because COVID has proven you don't necessarily need more physical branches; you need to provide the tools which the customers can use at any place, at their convenience. And that can be very rewarding. Similarly, if you look at healthcare, a lot of things have been talked about how digital health is going to be all pervasive, and there are many companies many new business models that are coming. On top of it every company is trying to look at themselves, whether you are in the third party, you know, administration for insurance, whether you are a card issuer, everyone is looking at themselves as a tech platform. So more and more we have seen everyone in tech becoming more platform centric; internal, external, even banking financial services companies calling them tech companies and so on. So, a longer term trend for us seems to be using technology, becoming technology centric. And we will see many of these newer things like the metaverse, the whole crypto part, and a lot of these things also come in.

Karen Collyer

I want to dig a little deeper, Sandeep, because one of the things that the Imagine Your Future podcast talks about obviously is; what technologies are hot and what trends are shaping our immediate future? And you said one of the words that I'm really interested in terms of Metaverse. So, if you think of like electric vehicles, quantum computing the metaverse, these things can be, technologies can be hugely disruptive, but are also going to provide a lot of growth in the future for organizations. What mega trends are you placing your bets on personally, in terms of what's happening in this space in the next year to next five years?

Sandeep Kalra

So, at Persistent we have a CTO organization that is at any point in time evaluating the technology trends that will become mainstream in the next three to five years. So, for example, we invested in blockchain many years back. And Steve, I know you are in UK at times so for example, in the UK, the Her Majesty's Land Registry in England and Wales; we are the ones behind a blockchain based solution where the HMLR manages more than 25 million titles, 20,000 changes every day. And all of this is based on blockchain, and all the smart contracts etc, using Blockchain. Similarly, when we look at you know, Forex settlement, we have worked with one of the leaders in the industry using Blockchain based solutions and so on. So, while people get very fascinated with crypto, the underlying technologies can be used for various different use cases, and we had invested in this many years back. We are doing mainstream solutions today. Similarly, if you look at Metaverse, and Metaverse means very different things to people. Today companies like Facebook, Microsoft, Google, everyone is coming out and talking about their versions. We believe this is going to be a much bigger play. This is going to be spawning off a whole new ecosystem. And this is going to be a play in which; whatever we have been seeing so far in AR VR, immersive computing, ambient computing, all of this is going to go to a whole new level over the next three to five years. So, we are investing in different things around the metaverse, along with different players, whether they are start-ups to even some of these established players that I talked about. And we do believe this will be another big area. And then depending on different industries that we talk about, there could be financial services, a play around decentralized finance that could be there. In security, there will be decentralized identity and so on. So, at any point in time, we are evaluating a number of these and investing along with some partners to be ahead of the curve.

Steve Hall

It's funny Sandeep, because I'm rereading Snow Crash, Stevenson's book. And I had read this thing in the early 90s and didn't think much at the time. I was at MCI, we were just really rolling out broadband and any kind of high speed, so some of it was so futuristic; maybe it shows my age a little bit. You jump ahead 30 years, though, and now all of a sudden you see everything in Snow Crash becoming the creation of what Facebook is redoing, and everything else. I think you're right, it’s going to be AR, VR, everything integrated. I don't know if you've read the book, but avatars jump in and out; obviously, there's marketing, billboards, everything, you create your own city. But you can sort of see where at the enterprise level, it becomes a way that we really start interacting with each other in very different ways. And maybe it's another one of those things that the pandemic has really just accelerated, and we'll clearly see a lot more investments in that area as we go forward. I'm not as on board with blockchain and DLT as some of the others, and I know that there's starting to be some really good case studies and use cases out there for it. When I think about the energy consumption, when I think about the challenges with DLT; and exactly as you said, not just on the cryptocurrency, but creating exchanges, it does seem like there may be some other solutions to it. Certainly, we know COP26 just happened. I think they were in Rome a couple of weeks ago for the climate discussions, and then they were in Scotland for COP26 in Edinburgh for everything. But it's been a piece that I've thought a lot about and talked to a lot of people about, but what's your sense on the IT industry, our industries’ responsibility if you will, for greenhouse emissions? And how do you see that really changing? And looking to the future how do you see the industry accelerating the move to net zero? And what's our what's our role?

Sandeep Kalra

So, first of all, this COP26, while I don't think people achieved what they wanted to achieve, but look, these are very complex issues we are all dealing with. And there are so many different interests. There is a developed set of countries, there's a set of developing countries. So, bringing all of this together in a meaningful manner is going to take time. And I do think the steps that are being taken are good steps and they will just get accelerated. Now, coming to our industry, our industry in the tech space, we can in our own way play a very big role. Whether it is using tech for good and using tech for solving some of these business issues, where we can bring technological solutions to many of the ways in which we can conserve energy, develop alternate energies. If you look at the solar energy, wind energy, a lot of these things have progressed a lot and there's a lot of technology that goes into it. Even at Persistent, we are working with many companies that develop these alternate sources of energy. So, there's a role to be played there. Then there is a role to be played as you know, good corporate citizens ourselves. So, for example, at Persistent, we have been measuring our carbon footprint for the last five years. From 2015 to 2020 / 2021, we have reduced our carbon footprint by 27%. Now how have we done it? We have rooftop solars in all of our facilities, we have windmills that we have invested in through our own money, we report our carbon footprint, we are reducing our water consumption. And we measure all of these things on an ongoing basis. We even measure the waste that we produce in the organization, and we are proud to say we have reduced it by 80%. Now, it's upon us as well as institutions to take our own goals, while you know the countries can take the goals for 2050, 2060, 2070. At Persistent for example, we have taken a carbon neutrality goal by 2024. We are well on the way to achieve it, whether it is doing the things that I said, or even doing simple things like we have planted about 100,000 trees in the last five years. So, there's, Charity begins at home. So, if each of our organizations takes it upon themselves to be carbon neutral at our organization level, and we as human beings become more cautious about it at our individual level, I think that's one more step towards this.

Steve Hall

Yeah. So well said Sandeep. As you said earlier, we may have our heads in the cloud, our feet on the ground, but you really lead by example. And I think you're absolutely right, for each one of our organizations, leading in that way, taking personal responsibility and driving our organizations is what's going to lead to a better future for all of us. You know what, I think that's a great place to leave it. Any final thoughts from you? I think you've given us a lot to think about.

Sandeep Kalra

Steve, it was good talking to both of you. And I sincerely hope that travel opens up even further than what it is right now. And I look forward to seeing you. I’ve  not met you in person for the last two years. Hopefully, we get to see each other soon.

Steve Hall

Yeah, absolutely. Karen, any final thoughts from you?

Karen Collyer

A couple of things. I wanted to say thank you to Sandeep. Thank you. That was a great conversation. And I think our listeners are really going to appreciate your insights. I want to say thank you to you, Steve for the really great nerdy book reference to Neil Stevenson and Snow Crash. That was a great book. And I wanted to remind our listeners that you can hear the imagine your future podcast and download other great discussions from ISG by going to www.isg-one.com\podcasts, or by looking us up on your favorite podcasting app.

Thanks to everyone for lending us your ears and we'll meet again.