We selected the best man for the job, I’ve never felt more comfortable with the business as it is today: Quess Corp chairman Ajit Isaac

 Fairfax Financial Holdings, owned by Indian Canadian billionaire Prem Watsa, holds 30 percent through its subsidiary Fairbridge Capital Mauritius Limited, while Isaac holds 22 percent. Quess listed on the exchanges in July 2016.

Edited excerpts from the interview follow:

It was interesting when you brought in Suraj Moraje, an external CEO, to steer Quess for the first time. But now you have opted for an internal leader, perhaps to ensure stability. What are your learnings here because we have seen this happening in other companies, where an external professional doesn’t necessarily work, and it could lead to issues around the culture or DNA of the company? What are your learnings as a founder?

So, the first point is that we did not choose stability. We chose the best candidate and the best candidate brings stability with them. One point I would like to specifically make is that he (Guruprasad Srinivasan) is the best man for the job and he automatically brings stability because he’s the right guy for the job.

Secondly, as part of the founding team, he, along with Lohit (Lohit Bhatia, President, Workforce Management) together built our staffing business from zero to becoming India’s largest staffing business. This is a seriously large business they have built. In addition, he went on to lead the India geography and all of the business that we do here, which includes asset maintenance, and smart city project, Ahmedabad.

So, you know, his diversity of experience across Quess, his respect as a leader internally, his performance every year, has been to deliver the numbers that he’s been assigned and that track record automatically made him the candidate. It is also a demonstration of bench strength that we have people who spend so much time with us. As the last point here, the previous CEO was only the first CEO we brought from outside and the only CEO we have lost in 15 years. So, I don’t think that’s a bad track record for a company that has only lost one CEO in 15 years. All other people are either still with us or are retired on the job. So, this is just to bring that out as a data point.

Considering that we have now seen three waves of the pandemic, are things picking up on the retail and logistics side? If you can give us an overview of the business and recovery, you see today...

The last quarter has been the best ever without question. First is that, at an environmental level, there are two things that we spot. One is that capex spending in the private sector is going to pick up. We have had industrial leaders say that it could be a capex Mahotsav in India for the next, let’s say, five to seven years.

We think with capex coming in, there will be a lot of opportunity for Quess as well because we have an asset maintenance business that’s the largest in India. So all of the capital that is going into building these assets will need maintenance. And we see an opportunity for that part of our business.

Second is that infra spend is also going to go up. The outlay in the budget is about Rs 7.5 lakh crore, up from the previous year’s budget. I think the target is to build about 25,000 kilometers of roads this year. So, that delta in the number of kilometres of roads being built will add to cement, steel, and construction industry investment, which I think will translate to jobs.

There’s also the movement of labour from the informal to the formal sector. So, as the largest employment company, we think we will get a larger share because of our geographical presence and also our presence across multiple industries. That will also influence our headcount going up.

And lastly, you know, almost 70 percent of India is now vaccinated. The third wave itself is seemingly on the retreat. So, with that, we are increasingly getting requests from our clients about opening offices up. So, with offices, retail stores, malls and restaurants opening up, food and beverage will increase business for our asset maintenance business. As the last point, here our FMS (facilities management services) business is back to where it was before the pandemic, without the IT offices opening up fully. So, that shows that the momentum in India is now building back.

The effort from Quess in the last couple of years is to have a unified go-to-market (GTM) strategy that will bring together all the businesses you have. Because you have so many lines of business now. Will that unified GTM strategy continue under the new CEO as well?

Guru himself has been the architect of one Quess strategy inside the company. He has been leading it initially to take it out to the market and he is best equipped to do so because he supervised many of our businesses in the past. So, we are continuing the strategy and strengthening it. So, when we go to a client, we can offer them staffing, facilities management, payroll services, customer lifecycle management, and compliance services. So, our strategy of investing in multiple business services areas that are non-core to the client is now coming out to play clearly. The reflection of this is in the expansion of incomes derived from cross-sales. So, one business goes and makes a sale first and after that, other services come in line again. So, our cross-sales are improving a lot.

What about the technology business? You have multiple digital assets, like Monster, Qjobs etc. How do you see these playing out?

So, the technology business has two parts. One is the customer lifecycle management business, which is essentially the Tata business support solutions company we bought and renamed Conneqt. The second is a digital asset that we own, Monster; we have Qjobs for the blue-collar sector, Taskmo for the gig sector where we own about half the company, and WorQ. All of the digital assets are basically tech investments in the employment sector. As some services in the employment space become more and more digital, we have a foot in the door, we have good assets and they are all being developed into market-leading positions.

Monster just raised some money and they got it valued at $100 million, up from the $15-20 million that we invested for three years ago. Similarly, we will take the other digital assets. We don’t see it consuming much cash from the business of Quess itself. Because we will get other investors, who have capabilities and competencies in the digital space.

Does this mean these assets will be incubated inside Quess as you raise more money? Can you share more on how they will work?

We have options and a corporate structure on how we will structure the company in order to raise this cash. But mostly they will be independent.

 You recently raised money for Monster. Will you be spinning it off at some point?

When we are ready for it, we will do that. But it is right now a separate company. We own the franchise for India, the Middle East and Southeast Asia. So, it is a good footprint we have. We own a substantial portion of the equity there. We will do what is best for all investors together.

How is Qjobs doing? This was a big bet on the blue-collar market, like what some startups like Apna are doing. What kind of traction are you seeing for Qjobs?

We have got about 2 million downloads already. So, it is a little bit under the radar right now and we are still in the build-out phase. But our understanding of the job markets, particularly on the supply side, enable us to build tech features inside Qjobs, which should differentiate it from the competition. We have requirements on the demand side from a bulk of the corporate (clients) that we work with. So, as it is, we’re able to now feed a lot of the people that come through Qjobs into the temp workforce and that’s working well for us. With 2 million downloads, obviously, we have a large candidate base that’s developing. The good thing about this is the momentum effect. Whenever the momentum builds, it multiplies that much bigger. So, while it took us maybe many months to get to the first million, it took us a couple of months to get to the second million. And I think that multiplication will happen over time.

Are you looking to raise more funds?

Taskmo (a gig economy startup) is another one that we will raise capital for. We own about half the company. When we bought it, it was doing maybe about Rs 13 lakh of revenue per month; it now does close to about or maybe over Rs 1 crore revenue (1 crore and 50 thousand) per month. So, it is clearly in the right space as a market leader and it will need some capital. We expect to bring in investors who have the appetite for such businesses.

With the gig economy taking off in the white-collar space in a big way, what are the opportunities you are seeing for Quess?

The employment space in India has seen accelerated changes thanks to COVID. Prior to COVID everybody worked in offices and working from home was an option. But what’s happened now is that about 10 percent of all jobs I think can be done permanently from home situations and may not be done from offices. About 30-35 percent of the total jobs can be done on a hybrid basis. You come into the office for a few days, meet cross-functional teams, and discuss projects. (Then) Go out to client offices, meet with clients, or alternatively meet with vendors to inspect project sites. About 50 percent of people will have to work from offices and production centers. That will not change. So that’s one change that’s happened.

The second thing is that the internet has connected supply and demand more effectively and in a different way in the last two years. So, the requisition of service (is now done) more efficiently through a phone or an app versus the past.

Out of the 530 million people who can work in India, about 230 million are in the farm workforce and the balance of 300 million is in the non-farm workforce. The IT sector still represents only 5 million out of this, and then another 5 million may be in the e-commerce sector. So, that’s about 10 million. And then gig workers are a far smaller number. So, there is a disproportionate amount of noise on these developments and The Great Resignation, versus what really is a larger problem of employment in, let’s say, MSMEs, migrant labour, and non-farm labour, where the salary is below Rs 25,000. That’s where I think the bulk of the conversation should actually start gravitating to over periods of time and policy, investment levels, and finally, employment creation.

What would your message be for investors or retail investors reading this interview considering that the Quess stock has taken news flow on the chin in the last few weeks? 

We can manage the risk of the business and the company. But market-related risks and pricing are something we cannot manage. Because it is a function of sentiment, media articles, and a few other things. We can’t control that.

 What we can do best is to manage business risk and I think we are well equipped to manage. We are doing that. Asymmetries in price to performance are buying opportunities, obviously. I think I’ve never felt more comfortable with the business as it is growing, as it is today. The only thing I want to say is that there is a continuum and there is no change in the strategy of the company. We will only strengthen the goals and take them forward into the next couple of years. So, I think for somebody who’s seeing the company from the outside, it is important for them to know that we are strengthening our delivery capability to meet the goals that we have set for ourselves, and they should not see us differently from what it was in the past. We will continue to strengthen internal processes that deliver 20 percent RoE (return on equity). In fact, we want to increase that RoE to a larger number as we move forward.