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BriefingNotes

Hexawareasa“DigitalDavid”1857SSTJune25,2016StantonJones

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Briefing Notes – Hexaware as a “Digital David”Summary

Hexaware falls into a category of mid-sized, nimble Indian firms known for their rapid growth and laser focus on

a limited number of industry verticals. This breed of firm has no fear of cannibalizing their revenue in order to

help its clients reduce costs and move to a more flexible, consumption-based infrastructure. This was our key

finding upon participating in Hexaware’s 2016 analyst day in Boston.

Key takeaways: Former HCL executive R Srikrishna is fostering a “David-versus-Goliath” attitude at Hexaware,

focusing on the idea that it can take market share from multi-billion dollar India Heritage firms. This strategy is

beginning to pay dividends, as Hexaware is now one of the fastest-growing IT services companies in India. By

helping customers shrink their IT maintenance and support spend with the use of automation and by

encouraging them to build more flexibility into their infrastructure to support digital business initiatives,

Hexaware has positioned itself at the forefront of a wave of next-generation sourcing providers.

Briefing Notes

Hexaware’s strategy is straightforward: to help customers take significant cost out of areas like testing and

infrastructure management using automation and improving consumption management. It then encourages

customers to re-invest these savings by transforming areas that will help them grow. While this approach is

simple in concept, it is difficult to execute given the size and complexity of large customer environments. To

address this, Hexaware has built a “composable enterprise” framework that enables them to isolate and

transform individual building blocks, rather than having to address the complexity of the entire IT estate.

Hexaware is building a culture of automation. Srikrishna actively encourages Hexaware account teams

to reduce revenues from a client using automation to retain the business in the short term if it means

they will grow the account in the long term. Hexaware wants to democratize automation by providing

power-users the ability to automate as they see fit. This is markedly different from the larger Indian

Heritage firms, most of which are building massive offshore automation factories.

Hexaware understands that Q is the new P. Hexaware is focused on helping clients find the levers to

reduce the “Q” in the Price x Quantity equation. By eliminating incidents and labor and by transforming

infrastructure, apps and business processes, Hexaware’s goal is to manage consumption rather than

price. As software continues to disintermediate traditional physical assets and people, price will become

more transparent and standardized, and this will lead to a renewed focus on implementing effective

consumption management practices and building infrastructures that can support a pay-as-you-go model.

Agile is moving beyond small teams and into the broader organization. Hexaware indicated that three

years ago 50 percent of RFPs included some agile approaches. Today, nearly all RFPs include agile

development practices. Hexaware demonstrated a deep understating of scaled agile practices, indicating

that customers should expect at least a 30 percent improvement in productivity. We found it interesting

that customers are increasingly asking Hexaware for help with the cultural implications of agile, a trend

we see happening across the broader market. Customers need support as they apply the agile thinking

used by small software development pods to a much broader organizational change program focused on

increasing agility across the enterprise.

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While Hexaware did provide customer examples and case studies during the event, no customers were present.

One of the most important things a provider can do at analyst events is to put customers front and center. This

increases credibility and provides an opportunity for customers and analysts to test concepts and discuss

emerging best practices.

Net Impact

Hexaware recognizes that growing revenue by adding employees is no longer sustainable. What is different

about Hexaware from many of the larger India Heritage firms is not that it is building platforms and services to

address this fact; it is that it is actively encouraging teams at the account level to reduce Hexaware revenues by

automating customers’ estates. This helps customers reduce their costs, increase their compliance rates and

reduce employee turnover.

While Hexaware’s lack of size and scale kept them from winning large global Generation Two deals, their lack of

size is now an advantage as clients begin the shift to Generation Three relationships (7 Characteristics of a

Generation-Three Relationship, 1834SST, 3June2016). Unlike the multi-billion dollar India Heritage firms, it has

not yet built up a massive “people pyramid”, giving Hexaware, and other sub-billion-dollar firms like it, flexibility

to make the pivot to new automated, consumption-based sourcing relationships. By playing the role of a David

in a market full of Goliaths, Hexaware is well positioned to help customers take out cost and incrementally build

a more flexible IT infrastructure to support digital business initiatives.

Summary Facts

Hexaware is headquartered in Navi Mumbia, India.

2015 revenue was $485 million with more than 11,000 employees.

Hexaware provides IT and business process consulting and outsourcing services and competes against

both Western and India Heritage IT services firms, BPO providers and systems integrators.

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