Daksh is one of India’s best-known names in business process outsourcing. In this case, founder Sanjeev Aggarwal takes you behind the scenes to understand the genesis and development of this enterprise. How do you organize and lead people to manage extremely rapid growth? Let one of India’s most successful entrepreneurs of recent times (Ernst & Young Entrepreneneur of the Year for 2002) show you how. Sanjeev Aggarwal served as Daksh CEO until June, 2006. He then co-founded Helion Venture Partners, a $350 million India-based venture investment fund, and he is presently a Managing Director and Investment Advisor.
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| Daksh grew out of a number of influences—the availability of venture capital, a proven business model, the influence of a high-quality advisor/mentor, and perhaps most importantly my very gutsy wife, who was willing to risk starving if things didn’t work out. |
Sanjeev Aggarwal’s journey to entrepreneurship
Sanjeev Aggarwal grew up in the state of Haryana, where his father was a judge and the family moved from place to place during his various postings. He attended secondary school in the city of Chandigarh, and did his engineering and MBA degrees there at Punjab University. After graduating he joined DCM, a large, diversified Indian firm. “I worked across functional areas and got very diverse experience driving new projects,” he recalls. “It was a little of everything—I was able to cross sectors doing commercial work, sales and marketing, business development, and shop-floor level management.” Aggarwal eventually moved to Pune, joining another diversified firm, named Thermax. Here, he worked with the computer systems division on two projects, one manufacturing and marketing computer modems, and the other developing parallel computing programs for the research and education sectors, working in cooperation with an Indian center that was designing a supercomputer.
After six years working for large Indian firms, Aggarwal entered what he now views as the second phase of his career, working for American multinational corporations. He explains:
India was liberalizing, and more American corporations came into the country. In the Indian psyche, it often seems favorable to work for an American multinational. That kind of job has a lot of appeal.
Aggarwal joined Digital Equipment Corporation, then one of the world leaders in computing. He first worked out of Kolkota, building sales in the steel industry vertical market, then moved to Delhi to run North India for DEC. North India was a profit center focused on selling and delivering technical solutions to vertical markets such as financial services, telecommunications, and selected manufacturing industries; customers included such well-known Indian companies as Maruti and Bharti. “Technology came from the parent, so we emphasized business development, customer acquisition, and customer service,” Aggarwal recalls. After seven years with DEC, he moved to Motorola, where he evangelized new business opportunities in India outside the firms’ core business of mobile telephones and infrastructure, including smart cards and cable modems.
After ten years working for US multinational firms, Aggarwal felt he had learned a great deal, but was not growing as much as he would like. He explains:
I was executing within a defined framework; I was not in charge of defining what that framework would be. The environment I was in limited my freedom, and I began to feel I was doing more and more of the same things. I have always wanted to be my own boss, so I began to think about starting a third phase of my career, becoming an entrepreneur.
The founding and growth of Daksh
By 1999, India was seized by entrepreneurial ferment. Venture capital was available in quantity for the first time, and General Electric had proven that one could outsource certain business processes to India with great success. Aggarwal and an old friend and former classmate, Pavan Vaish, began exploring different options, including a Web portal for children and a standard information technology services company. Aggarwal recalls:
IT services seemed too crowded, but India seemed more ready for revenue-driven services than for models based on attracting eyeballs. You couldn’t build an Amazon in India then, for example. In every journey, someone else is instrumental in your success, and for us it was my wife’s brother, Ashish Gupta, an entrepreneur to whom I was closely connected. He had built Junglee and sold it to Amazon in a very successful exit, so he helped us think through a business model. Ashish was intimately involved with the Internet, and he helped us zero in on the idea of providing customer services over the Internet to Internet companies in the US. So Daksh grew out of a number of influences—the availability of venture capital, a proven business model, the influence of a high-quality advisor/mentor, and perhaps most importantly my very gutsy wife, who was willing to risk starving if things didn’t work out.
Gupta seed-funded the enterprise as an angel investor, and the co-founders secured Edelweiss Securities as its investment banker to help secure a formal round of financing. After talking with several venture capital firms, the partners accepted its first round of professional investment from Commonwealth Development Corporation (now Actis). Says Aggarwal:
Venture capital wasn’t a very mature industry, but they seemed like a very mature set of people who had a track record of helping to build companies. They had experience in the UK and India; they weren’t folks who had just started investing in ventures. They also were very quick in going from first meeting to a term sheet; they offered us a simple diligence process and a reasonably good valuation.
Aggarwal and Vaish formally launched Daksh on January 4, 2000 in Gurgaon, intending to focus on providing email-based customer service to Internet companies. Within two weeks, Aggarwal was in the United States calling on potential clients in the Bay Area. Vaish’s father owned a company that lent the entrepreneurs space, so they bought a few computers and an email server. Within three months, Daksh had secured its first customer, Bigstep.com, a startup that specialized in helping businesses simplify the set-up and operation of e-commerce sites that could accept credit card payments. Daksh achieved a major breakthrough in June by securing one of the most prestigious reference customers in e-commerce: Amazon.com. Aggarwal elaborates:
We got a good dialog going early thanks to introductions from Ashish, and once they began to engage us, we found that they had a large customer service component that was amenable to relocating to India. We showed them the value of India in terms of the quality of people and the cost structure, but it was tough for them initially, because the CEO was reluctant to move a core asset such as customer service outside the firm, much less outside the US. We were fortunate to find a true entrepreneur in Bill Price, the vice president of customer service, who could see what outsourcing could do for him. Once they figured out what they wanted to do, they put out a request for proposal and we secured them as a customer in June, 2000. That was a big inflection point, and in December during the holiday rush, we managed much larger throughput than they had anticipated with higher quality and lower cost than they had imagined. We ended our first year with revenues of about $2 million and margins of about 5%.
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A very good article. I was among the first batch of employees in Daksh . I still remeber that my id as 0133 as I was the 133rd employee. We were involved in the Amazon back office process. I have personally met Mr. Sanjiv, Mr. Pavan and Mr. Arvind. I was promoted to team lead within 3 months of joining and Mr. Sanjiv joked "Ah!! The Sanjeeb with a b!!!".
It's been 10 years and nice to know that it has grown big