Last week I introduced Ajit Prabhu, the co-founder and chief executive officer of QuEST Global. My interview with him was fascinating, and during our discussion, I learned that the basic idea behind QuEST was born while Ajit was working at General Electric. Whether Ajit knew it or not, he began employing the time-tested stratagem – Exchange the role of guest to that of host.
Ajit noticed that his boss continually struggled with sustaining a sufficient supply of engineering resources. Because GE lacked sufficient full-time engineers, the company relied on relatively small, local talent agencies and consultancies to meet its demand. But more often than not, the applicants didn’t actually meet the needs of GE managers.
Ajit would hear them complain about how the managers had to sift through piles of files to only find one or two people who could actually fit the job requirements. Ajit could not resist what he saw as an exciting opportunity. He felt he could do a better job than many of these local agencies. Although Ajit enjoyed his work at GE, he was only a guest in that company. He relied on GE, his host, to support him.
But Ajit could not suppress his desire to start a business any longer. So after several months toying with the idea, Ajit met Aravind Melligeri, another entrepreneur at heart, and the men immediately clicked. Aravind agreed to take responsibility for finance and operations. Ajit would handle sales and client relations. They established their engineering outsourcing firm, QuEST, and started working for their first client, Ajit’s previous manager at GE.
They proved their worth, won more work from GE, hired more engineers, and watched their revenues grow. From the start, they earned much more from this business than they would have as employees. They reinvested the excess money into the company to fuel growth.
They now faced a critical strategic decision: how should we grow? They could either hunt down new customers or seek out new work from their current client, GE. Compelling arguments exist for seeking out new customers. This path reduces risk. A company’s revenue is more stable if it diversifies across clients and services.
But QuEST has thrived by adopting precisely the opposite strategy than the accepted norm. Instead of seeking out new customers or expanding into new services, the team focused on winning more of the same business from GE. They increased their dependence on GE, but by choosing this unorthodox approach, they triggered a strategic dynamic that has created superior competitive advantage.
With each engineer QuEST assigned to the GE account, QuEST strengthened its relationship with GE. As the relationship deepened, GE began to entrust QuEST with more complex and critical projects. After eight years, QuEST’s GE team has grown to 350 engineers.
Beyond the scope of supplying employees, QuEST has risen to be much more than an outsourcer. It works on sensitive engineering projects. It has become strategically important. It is no longer easily replaceable. Its revenue stream grows more predictable.
“Projects don’t have peaks and valleys,” Ajit says. “We have long-term relationships with our clients.”
Perhaps QuEST will always remain a guest of sorts in GE’s home, but at least it is a regular one who keeps a toothbrush there and has its own room.