How Virtusa helped JPMorgan Chase connect with millennials

Monday, 3 February 2014 01:23 - - {{hitsCtrl.values.hits}}

By Megha Bahree Forbes.com: Krishan ‘Kris’ Canekeratne has one message for his clients – if they want to get, and hold on to, the next generation of customers, the millennials, they need to change how they do business. Canekeratne, Co-Founder and Chief Executive of Virtusa, an information-technology services company that partly originated in Sri Lanka and headquartered in Massachusetts, says millennials – or those born after 1984 – are more digitally savvy than any previous generation. “They grew up with a handheld device that’s more powerful than a supercomputer of five or ten years ago, one that’s inextricably linked to their side,” says Canekeratne, 48. “This is their preferred way of communicating. If enterprises don’t take advantage of this, they will lose a large part of their customer base.” "This story appears in the 10 February 2014 issue of Forbes Asia" His company helped JPMorgan Chase cater to that clientele by creating a mobile-banking app that changes how people can do certain mundane tasks like depositing a cheque. Instead of going to a bank branch to deposit a cheque, they can take pictures of the front and the back of the cheque with a smartphone or iPad and use the Chase mobile app to deposit it. The app was a huge success and other retail banks have since developed versions of that service, says Hansa Iyengar, an analyst at Forrester Research.

Apart from helping its clients target their audience via current technologies like mobile phones and tablets, Virtusa also offers consulting services and focuses on the traditional IT work of developing software and integrating systems for companies in banking, insurance and telecom sectors. For the fiscal year ending 31 March 2013, Virtusa netted $ 28 million on revenue of $ 333 million, a 40% earnings gain that helped it attain Forbes’ Best Small Companies list. Nearly three-quarters of sales were in North America, with most of the rest in the UK. Sri Lankan IT sector Sri Lanka’s budding IT sector has often been drowned out both by the country’s 26-year-old civil war, which finally ended in 2009, and by its bigger neighbour India’s gigantic offshore business. For the year ending last March, Sri Lanka exported software worth $ 600 million. The Government, in an effort to boost the sector, offers attractive tax breaks, and thus Virtusa, like others in Sri Lanka, doesn’t pay taxes. Virtusa is Sri Lanka’s largest tech employer, though it has an even larger workforce – 4,500 people, a little more than double its staff in Colombo – across three Indian centres in Hyderabad, Bangalore and Chennai. Employees at all centres do similar work for clients. Canekeratne grew up in Colombo, where he was the national champion for golf and table tennis in the ‘Under 16’ category, as well as the president of the student union at his high school. His father, until his retirement in the early 1980s, ran one of the largest conglomerates on the island nation, Rowlands, a holdover from the days of the British Raj (Rowlands no longer exists). After finishing high school, Canekeratne went to the US to study computer science at Syracuse University. Around the same time, his childhood sweetheart, Tushara, went to the UK to study mathematics and computer science. After graduating, the two married in Colombo in 1989 and moved to New York for their respective jobs. The early ’90s In the early 1990s, Canekeratne was working at a start-up in New York, where he was building a platform to transfer microfiche and microfilm to

high-performance optical storage to provide instant access for archival files. He was travelling frequently to India and Sri Lanka and realised that the outsourcing industry there was mostly focused on mundane things like maintenance of companies’ IT systems, checking for bugs and updates. “There was a very strong talent pool in South Asia but much of it was being deployed against things that were not very intellectually stimulating,” recalls Canekeratne. In 1996, the couple moved near Boston to start a company, which eventually had six engineers working out of their basement and another 10 in Colombo who worked from Canekeratne’s ancestral home built by his grandfather, a judge. The engineers were housed in what used to be the chambers where his grandfather met with clients. In the next couple of years, Canekeratne cofounded with friends another company (eDocs) that he later sold to Oracle. During that period, he and his wife had two sons. “We then stopped having children and stopped starting companies,” says Canekeratne with a laugh. Virtusa listed on the Nasdaq in 2007, just ahead of the global financial crisis (Tushara stepped down before the offering and now advises the board). “When we were out doing the road show, we were seeing the Dow oscillate 300 to 400 points every day,” recalls Canekeratne. “If we hadn’t seen it through then, I’m not sure if we’d have found another window of opportunity to go public, until perhaps now.” Virtusa’s challenges One of Virtusa’s challenges, analysts say, is its size. It’s a midsize IT company, which, to its credit, often competes with the big boys from India. But “they’re not very well known in the marketplace,” says Jimit Arora of Everest Group, a consulting firm. “People who work with them like them, but people who don’t work with them don’t know them, and that’s a large disparity.” One of the bigger threats for Virtusa, says Arora, is that “as large companies rationalise their portfolios, the guys who get marginalised first are the smaller guys. They need to quickly scale up and hit the billion-dollar revenue mark.” Virtusa believes that some of that growth will come from millennials as they emerge as consumers and employees. “As we go through that shift, more consumers will want access through their preferred medium,” says Canekeratne, whose founder’s stake, along with his wife, is worth $ 53 million. In one case, Virtusa is working with three banks – two in Europe and one in the US – to help them get new millennial customers (Virtusa says it cannot name the banks because of client-confidentiality agreements). The idea, which came out of the company’s innovation lab in the southern Indian city of Hyderabad, is for the banks to target such potential customers with exactly what each individual may need. For instance, if the bank can find out where a young new graduate is starting his first job, it can send him a text message offering him a preapproved car loan and a list of car dealers whom the bank works with, the goal being to draw him in as a customer for that and other services. The key is to offer traditional services that help the banks make money but with a modern touch that the potential customer understands and is comfortable with. Virtusa says it’s easy enough to gather information about people and flesh out their lives so that a company can market pertinent products to them, since there’s plenty of data publicly available on a range of social networks, including LinkedIn, Facebook and Twitter. “What does a young millennial do when he graduates and gets a job?” asks Canekeratne. “He updates his status.” The company is in various stages of building this out for the three banks. “If I can send him this text message, offering him exactly what he needs at that point, I have potentially dropped the seed to create a lifelong relationship with that millennial,” says Canekeratne.