Persistent Systems is a leader in digital engineering and enterprise modernization, working alongside independent software vendors to develop products and platforms like SaaS and cloud technology. The company has annualized revenue of approximately $1 billion, a market cap of $4.6 billion and more than 20,000 employees globally.
I recently spoke with Sandeep Kalra, the company’s CEO and Executive Director, who shared his thoughts about leading a large global organization while maintaining its culture, its path to $1 billion in annualized revenue, lessons in acquisitions and the future of software development.
Fostering Culture And Maintaining Values
In today’s fast-paced business environment, growth is the key to success, but it can be challenging to maintain a positive company culture while expanding rapidly. Kalra’s primary goals, when he took on the CEO role, were to accelerate the company’s growth while maintaining its already strong culture and values.
However, the COVID-19 pandemic presented an unexpected challenge. The company and its 22,600 employees had to adapt to a work-from-anywhere model quickly. “The most important thing for me was to unite the people in this journey in an environment that was far from normal,” he said.
The company undertook several initiatives, including involving employees in decision-making, despite working virtually. They also introduced an employee stock option plan that covered 80% of the employees. This plan allowed employees to have a stake in the company’s growth and wealth creation, reinforcing their commitment to its success.
Three years ago, the company set a goal to become a billion-dollar organization in four years. Kalra stated that this goal became a rallying cry, and each employee took ownership of their role in achieving it. “When you are taking a company forward with so many employees, you need a common goal. You need to bring everyone together and create a common target with them regarding our aspirations,” he emphasized.
Path To $1 Billion AR
Reaching a billion-dollar milestone in annualized revenue is a challenging feat. It takes strategy, hard work and a team to make it happen.
Kalra explained that Persistent had a strong culture and capabilities when he inherited the CEO position. However, to achieve their billion-dollar goal, they needed to look forward and identify the latest technologies and business trends relevant to their customers.
“If we want to be more meaningful to our customers, what does it take to become more relevant to them and their businesses? If we look through that lens, certain technology trends would be imperative,” Kalra said.
Kalra and his team identified key technologies, such as cloud, data AI and cybersecurity, making them their “big bets” for the future.
The company focused on its existing capabilities and brought in new leaders from outside the organization to complement its leadership team. Persistent Systems also made acquisitions to bring in new capabilities to accelerate its journey. In total, they acquired seven companies within ten quarters, ranging from $2.5 million in revenue to about $48 million, all with significant capabilities to add to their offerings.
Another critical aspect of their success was investing in learning and development capabilities at scale. “Because we are in the technology business and it moves very rapidly, we had to invest heavily in learning and development by bringing professional trainers and tying it up with our hyper scalers partnerships, like IBM, Amazon, Microsoft, Google and Salesforce, training our teams to deliver the latest technology stacks,” he said. The company then embedded these technologies in its strategy to showcase how it could embark on its own growth and digital transformation and bring that to its customers.
Lessons In Acquisitions
Mergers and acquisitions (M&A) are often a way for companies to grow their business quickly, but they come with many risks. Kalra acknowledges that most acquisitions fail because they are not well-planned, and integration becomes a big issue. To avoid this, Persistent Systems proactively works to build relationships with these companies’ founders and management teams to ensure they are the right fit.
“Through our meetings and by building genuine relationships, we can see whether there was a good cultural fit between the two organizations, as well as whether we can give the people coming in the right career path within our organization,” he said.
Kalra emphasized that their approach to M&A is proactive and based on building real relationships. He added that their acquisitions have worked out very well so far, and they now have a healthy playbook for successful future acquisitions.
Betting On The Digital Engineering Landscape
As we move into the future of software development and digital engineering, Kalra states that there are several trends that we can expect to see continuing to shape the industry.
One key trend that has emerged in recent years is the digital acceleration of enterprises, which the COVID-19 pandemic has driven. While there may be macro headwinds to contend with, Kalra believes this will continue to be a focus for years.
Another trend to watch is the evolution of cloud technology. “Many people think that the cloud is about lifting, shifting and migrating applications and data to the cloud, but the hyper scalers are working far beyond that,” he states. The hyper scalers like AWS, Microsoft and Google are developing industry-specific solutions to expand their addressable markets, allowing companies like Persistent Systems to align with these players and stay relevant in the ecosystem.
Cybersecurity is another area where Kalra sees continued growth in the coming years. As more people work remotely and travel becomes more common, the need for more robust cybersecurity measures will only increase.
In response to these growing trends, Kalra and his team have set their sights on achieving the $2 billion mark over the next four years, focusing on these critical areas to drive growth.
See Beyond, Rise Above
Persistent System’s tagline “See Beyond, Rise Above” speaks to the company’s culture of innovation and forward-thinking values. Kalra states that while it can mean different things to different people, it ultimately encourages employees to think beyond the status quo and be proactive in shaping the future for their customers and the company.
“For example, when we talk and meet with our customers, we’re not just looking to solve their current problem, but working to make sure they’re able to deliver more value to their customers so they can become more competitive in their landscape,” he said.
Working Hard And Learning New Skills
Regarding business success, everyone wants to be in the upper right-hand corner of a two- by- two matrix, signifying an upward trajectory. But what does it take to get there? For Kalra, it’s all about working hard and learning new skills.
He credits his success story to his humble beginnings. His parents immigrated to India from Pakistan, losing everything during the country’s partition in 1947. Despite the hardships, they worked hard to provide Kalra with the best education possible. This foundation set him up for success when he attended the Indian Institute of Management.
From there, Kalra worked his way up the ladder, first in sales, then starting new operations in different geographies, and finally in private equity.
Kalra compares his leadership journey to that of athletes. “I have three daughters, and all are in gymnastics, at different levels. Every year you learn a new skill, and you’re moving up and gaining more experience. Eventually, you’ll reach level 10, and then maybe someday, you’ll go to the Olympics. Reaching that goal is a culmination of all you’ve done along the way, so many different pivots, but all good turns,” he said.