AGC Networks throws up a ‘10 cubed' strategy for business growth

Kripa Raman Updated - November 15, 2017 at 11:01 AM.

Mr S.K. Jha, Managing Director and CEO, AGC Networks

AGC Networks is the technology services business of Aegis Ltd, an Essar enterprise. It is a solutions integrator in enterprise communications.

Mr S.K. Jha, Managing Director and CEO of the company, is also an entrepreneur in his own right, having once started a company called 3D Networks, which was later acquired by Wipro, a company he later joined. Currently, growing AGC's addressable business to make it a $1 billion company is his obsession.

What is distinctive about AGC Networks?

We have a very unique sort of situation globally where we have very large organisations such as IBM and HP, which are worth over $100 billion. Then you have the next level which comprises companies in the likes of Microsoft, Cisco, Oracle, Nokia Siemens, Ericsson,Huawei – typically in the $30-70 billion range.

Below that are TCS, Wipro, Infosys, HCL, Tech Mahindra, Juniper Symantec and so on in the $3-10 billion range.

The interesting part is the level below that. What you get are very fragmented, small, mom-and-pop, regional, OEM types of organisation, anything between $500,000-$200 million. So there is this huge gap, and opportunity.

I pondered: Can we have an organisation that is multi-geography, multi-solution, multi-skilled, and achieve a size of a billion dollars in a very short time period of five years?

It was a very audacious goal, But we met the CEO of Aegis (of the Essar group) and we saw a confluence of minds. So we started the technology part inside Essar known as Aegis tech sometime in 2009.

If we were to get into the next level, it was important that we get to a critical size very fast. So that means go and do an M&A. With that we started to scout the market and in 2010 sometime in October we completed the acquisition of AGC. It was earlier Avaya Global Connect, listed in Bombay, 60 per cent owned by Avaya, we bought it from them.

So how do you propose to be a billion dollar company in five years' time?

Pre-acquisition, this company was doing around $100 million, and had a total addressable market of $500 million. We had a choice to grow this by 25 per cent or 30 per cent but we took a very contrarian, different view. We were able to increase the addressable customer market from $500 million to $10 billion overnight, which was a 20x multiple. And that is very significant.

We are starting to come out with a differentiated strategy called “10 cubed.” We created a lot of significant OEM relationships whether it is with Cisco, Juniper, HP, IBM, or Dell.

We said, can we have 10 very significant relationships, similar to what we have with Avaya?

Can we create domain and vertical understanding in 10 very significant areas of IT, ITeS, manufacturing, government, Defence and all that?

Can we have our offerings in 10 different geographies?

So our total addressable market is now 10 cubed, which is 1,000 times.

We also created a new method of working called “cooptation” rather than competition. As we see it, we work with almost every one of the names that we talked about.

Will you unlist AGC, since Essar has delisted many of its companies?

We will continue to be listed. I think we see value in that. And the amount of effort required to delist also is very high.

What is the kind of growth you have in mind?

Difficult for me to put a number because I would outperform it, but it will be big.

Unfortunately, we don't give guidance. But we have a total strength of 1,500 worldwide today. And we are hiring 1,100 in India, 400 in other countries.

> kripram@thehindu.co.in

Published on April 6, 2012 15:59