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Interview with Kamal Budhabatti, Founder CraftSilicon and 2009 Top 100 SME
Date Published: Thursday January 28, 2010
Not many people outside of the banking industry know of Craft Silicon, a local banking software outfit powering the operations of numerous financial institutions in Kenya and across 38 countries worldwide. In 2009, the firm was ranked 7th in the the annual Top 100 SMEs survey and won the Innovative Award. Their participation in the survey knocked Craft Silicon out of its closely guarded shell, and brought it into the limelight. With such a tremendous leap of fortunes, even Tujuane could not resist the urge to attempt a glimpse into the enigma that is Craft Silicon and its founder and CEO, Mr. Kamal Budhabatti.
Tell us about Craft Silicon? When it was established, by whom?
We are developers of software in the financial sector, mainly commercial banks, micro-finance institutions, Sacco's, software for mobile and internet banking. We got established on October 30, 2000 and this is our 10th year of operation. I founded the company. I had just finished my studies and came to work in Kenya, but the job was not very good. I quit the job and a friend who was in the banking industry introduced me to developing software for their bank. My background is neither in software development nor Finance because I did sciences at the university and I had not done this before I came to Kenya. But in India everybody knows about software so by proxy I had some knowledge about it.
What are the products offered by Craft Silicon? In how many other countries does Craft Silicon operate?
We provide end-to-end solutions. We have products for banks, micro-finance institutions, Sacco's, internet and mobile payments, and for electronic payments. This year we are coming up with products for insurance and stockbrokers. This is quite wide compared to our Kenyan competitors who are quite small in operation. This gives us an advantage over them and when we sell one product we have a chance to promote the other products to our client.
We currently sell our products to over 38 countries globally and we are still expanding. We have partners in all this countries to sell our products and we support the products from here in Kenya. Although I was born in India I believe I'm a Kenyan and also sell my products to India too, which people find very strange.
Briefly detail how Craft Silicon has grown over time to become the best in the industry?
Starting from 2000 we had this first bank that wanted to buy clearing house software. At that time many banks in Kenya were consolidating, many finance houses were converting to commercial banks. This particular bank wanted the software but they didn't want to spend too much on it. Since we were very cheap we developed the software for the bank, by then it was called Consolidated Finance now it's called ABC bank. They liked it and it worked very well for some time. They then introduced us to City Finance Bank and from there I got more jobs from other banks.
Our customers have always been our advocates. The company has grown based on our superior products and good services. But now we need to develop our social network because the company is becoming big and we want to keep a good image.
When Craft Silicon started I was the only one, now we have 200 and we can easily grow to 600 because we have the structures and enough finances. Everything was a natural growth, we didn't grow instantly. Once the company grows managing the human resources is always a challenge, but that again locks down to a couple of things. One is if you train them to be responsible. Micro-managing will only create a problem.
It's clear that at the beginning you did not expect that Craft Silicon will become this big multinational company. How have you managed this huge growth in a very short time?
Obviously everybody is ambitious and I didn't know how big or small it could grow. We wanted the company to grow big and it has grown big, though we still think it's not big enough. We want to be able to hire more than 100,000 people; currently we only have 200 people.
There are no large software houses in Kenya compared to India where they employ over 300,000 - 400,000 employees. We don't just want to sell in Kenya we want to sell our softwares all over the world and the opportunities are there. Though the company was not started with a global vision, with time we've grown and now we have bigger vision.
From your experience what would you say is best way to finance a start-up?
Nobody finances a start-up, not even banks. The best way to finance any business is to start with what you have and work hard, keeping in check your expenses. If you go to a bank with a fresh idea, it would be very difficult to get financing, especially in the emerging markets. It's even more difficult for an IT company, since everything is a concept and there are no tangible assets.
We have never taken financing up to now. We believe that up to a certain extend a company should fund itself. It very risky to take financing at an early stage and not manage it well, then your company will collapses. Then once you take financing it creates complacency when people see large sums of money sitting idle in the bank.
Now we can walk to any bank and get financing. Right now we have taken a loan to finance the construction of our office premises, but our operational cash flow is good. I also believe at this stage it's good to take financing. We currently want to acquire some companies in the local market and this may require huge payouts and some external financing may be required.
How do you make your employees understand what the company wants and you are not going to borrow money although you can access more money?
Your staff would not take a pay cut, they would rather leave you. Sometimes when this happens you just need to hire new people and ensure that you have at least three months of salaries in the bank. When worse comes to worst you as the founder and employer have to put in more effort, work three times harder to avoid employing someone when you don't have money to pay them.
The IT field is known for its high rate of employee turn-over. Am sure you must have experienced this in your initial days how did you mitigate against this?
I think it's always good to keep your staff aware of what is happening, bring them along with your vision, make them part of it so that even if the salary is delayed they know why and understand why they need to wait. It's not only the salary that will make an employee stay. I could give someone the best salary but if the working environment is not good he'll leave. We have had people leave us for better paying jobs and still come back due to bad working conditions elsewhere.
At Craft Silicon the working environment is very good. We try as much as possible to make the employees comfortable. In our new building we are adding things like a gym, swimming pool and giving them free lunches. These really ought to boost their productivity more than big salaries.
How has the mobile phone and internet revolution in Africa and emerging markets influenced the way you do business?
We are an innovative company. So we always have to keep looking at new development in technology. Based on this, we develop new products. When mobile and internet came up it helped us develop new software and new revenue opportunities. We were the pioneer company to develop an internet banking software in the Kenyan and other emerging markets.
What would you say are some of the major challenges that have faced the company over the years?
Apart from financing, another big issue is people/institutions having trust in you at the beginning. Large institutions like to deal with large service providers and not individuals. But that challenge can only be dealt with over time as the business grows. It's good to grow with your customers. I'm still with ABC bank up to now. But over 85% to 90% of our business comes from outside Kenya. The Kenyan market is saturated and Kenyans don't like to buy products from Kenya.
What would you say is the level of competition in your industry and how has Craft Silicon worked around this?
We have a lot of competition from global clients but not in Kenya. There is no company in Kenya that does what we do. Most banking software in Kenya comes from outside. Some of these global competitors are very large; our nearest competitor is ten times bigger than us. To beat them to a contract, we try to behave like we are big as them, give better pricing and also through commitment to the customer.
Being a company that hires mostly young talents, what would you say is the level of professionalism among Kenya youth?
Kenyan youth are very smart. If you give them the right opportunity and right infrastructure they can do wonders. My clients get surprised and keep asking me if I get Kenyans that can write such complex software and I tell them we never have any challenges in developing any software. Kenyan youth are very bright. The only thing is that our environment needs to be a bit more cohesive.
From your company experience conducting business across different countries, how does Kenya compare to the other countries you operate in?
Since we are not very big, we've never had any problem working in Kenya. Probably as we grow big we may run into some friction. Craft Silicon is a very silent and focused company; we don't interfere in whatever is going on in the country.
Where do you see Craft Silicon in the next 5, 10, 15 or 20 years?
3,000 employees is our 5-year ambition. We are moving into our new building, 'Craft Silicon Campus' off Waiyaki Way in Westlands next month. All of our employees can fill in one floor now, but we are looking at filling it with 600 employees and in 5 years we may need to build another one.
Our plan is to get listed on either the London Stock Exchange or the New York Stock Exchange, but we are still evaluating. We believe the Kenyan market doesn't appreciate the value of an IT company.
What CSR activities, if any, has Craft Silicon seen fit to engage in?
We have a foundation, the Craft Silicon Foundation; it's a CSR activity for the company. We provide free computer education in the slum areas. We have a bus fitted with computers and goes round to four slums everyday and get students taught about computer and internet stuff. We have two tutors, the program manager and the foundation CEO. We give them two months courses and award them certificates. We also employ the best students from this program at craft silicon.
What's your company's revenue composition?
Over 90% of our revenue comes from the sales of softwares. When we sell the software then we get other revenues like installations and providing support. But this is about only 10%.
About Kamal Budhabhatti
Tell us about yourself? What's your personal and Educational background?
I was born in India; I studied there and graduated in physics nothing to do with IT or finance. But as I said I was very lucky to be at the right place at the right time. I got a lot of help form other people and I'm very thankful to them all and I still keep in touch up to today. I learnt some IT outside the school as a hobby. My parents are in India, I've got two brothers and one sister. I got married here in Kenya and I have one daughter. I'm now in my thirties.
What are the some of the challenging bits of being Kamal Budhabhatti? What are the most fulfilling?
The greatest challenge of being me is that I'm a workaholic and it's such a big challenge to balance this with family and a social life, but it's my passion to grow this company. The fulfilling part is to see my daughter growing and my company growing.
CONTACT INFO
Craft Silicon Limited
Phone: +254-20444 0343
Website: http://www.craftsilicon.com
Email: info@craftsilicon.com
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