One of the best CEOs: Sandeep Kalra's transformation of IT company Persistent Systems into a global giant

The company's CEO, Sandeep Kalra, plans on turning Persistent Systems into a $2 billion IT services company by the end of his time at the company

When Sandeep Kalra was elevated as CEO and Executive Director of Persistent Systems in October 2020, he knew that he was taking command of the IT services firm at a pivotal time. Kalra joined Persistent in May 2019 as President of the technology services unit from HARMAN International, a Samsung company. 

To his credit, Kalra took on the challenge with gusto—breathing new life into the three-decade-old company and propelling it to new heights. And he says his management mantra, of bringing people together and inspiring them to rally around a common goal, has helped him deliver the required results.

 For instance, one of the key goals he had set (in Q3FY22) was to get to $1 billion in annual revenues in six to eight quarters. And, the company is now well positioned to reach that mark in the March quarter of FY23, in just five quarters.

That’s where we put a rallying cry, reaching a $1-billion (revenue) mark,” says Kalra, the winner in the IT & ITeS category of the BT-PwC India’s Best CEOs ranking this year. From a run-rate perspective, we crossed the billion-dollar mark last quarter (Q2FY23). That has been a good milestone and a very proud moment for us as a team,” he says proudly.

Persistent, in October 2021, extended its Esops to cover about 80 percent of its employees. Nobody in our industry, even across multiple industries, has such a rich coverage of employees in the stock option plan,” says Kalra. After taking charge, Kalra concentrated on refining Persistent’s strategy, filling the gaps in the team, and establishing and measuring key performance indicators.

Persistent also committed roughly $240 million to seven acquisitions over the past eight to nine quarters. Nine quarters ago, we had 17 big customers—with annual revenues of $5 million or more. These acquisitions are enabling us to offer additional services to the same customers,” he adds.

The third quarter of FY23 marked a record-breaking achievement for the company as evidenced by the exceptional total contract value of $440 million and an annual contract value of $326 million, surpassing all previous figures. They have been able to sell multiple service lines to customers and that is reflected in their $5 million-plus client count, which has pretty much doubled over the past couple of years.

All of this is achieved by improving the margin trajectory over the past few years,” says Apurva Prasad, Institutional Research Analyst at HDFC Securities. The brokerage firm, in its February report, said the company is well positioned to double its revenues over the next four years, with earnings expected to accelerate even faster (24 percent EPS CAGR over FY23-25E) as margins expand.

Persistent’s growth trajectory will be supported by strong order bookings and a steady ramp-up of large deals, improved client mining supported by partnerships, mitigated client concentration and European geopolitical risk (Europe accelerator in the medium term), and stability in top 2 clients, the report said.

 The pandemic brought about both opportunities and challenges for the company, with remote work becoming the norm and business growing, but attrition rates also peaked. To maintain cost stability, the company, under Kalra, focussed on-campus recruitment, hiring over 3,000 freshers and investing in learning and development initiatives.

Kalra says the company is seeing bright spots in enterprise software as well as on the digital transformation side. “We aim to be a $2-billion company in the next four years. Our commitment to ourselves and our stakeholders is that we’ll grow faster than the industry, we will do that by bringing our people together, celebrating success and failures alike,” he says.

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