1. 1 © John Mullins, 2012 TeamLease: The Rest of the Story John Mullins London Business School

2. National Entrepreneurship Network 2 © John Mullins, 2012 The Decision Whether to Sell Global valuations were at.5 x revenue India’s valuations 1.2 x = $40-50 million, possibly more Ashok Reddy asked his I-banker friends Their answer: “Hedge your bets: take the money while it’s on the table.” Reddy and Sabharwal put the question to their management team…

3. National Entrepreneurship Network 3© John Mullins,2012 The Decision: Don’t Sell Reddy: “We knew we would turn profitable soon, and we were the strongest player.” “When you are having fun, it’s too soon to sell.” A bird in hand vs. a bird in the bush? –Reddy: “I’d rather have two birds at a later stage!”

4. National Entrepreneurship Network 4 © John Mullins, 2012 TeamLease: Progress Reached cash-flow breakeven in 2005 Hit 50,000 temps mid-2006 Reached 82,000 temps in 2008, India’s number 2 private employer What then?

5. National Entrepreneurship Network 5© John Mullins, 2012 Global Growth Hits the Skids: Implications for TeamLease? Let’s consider temporary help as a staffing solution –A springboard for growth when clients’ business is good –But a shock absorber when times are tough

6. National Entrepreneurship Network 6© John Mullins, 2012 The Result Temping took a hit globally: India, too Selectivity went up TeamLease numbers fell back to 54,000 temps by 2009, but cash flow still positive Back to 63,000 and growing by early 2010, will hit 100,000 in 2011

7. National Entrepreneurship Network 7© John Mullins, 2012 The TeamLease Client Base Initial clients were MNCs, past IndiaLife clients Indian companies saw the benefits Client base now 90% Indian companies –54% are sales and marketing positions –Key verticals: Telecom, FMCG (no IT/BPO) –Employment mix: 85% white collar jobs, 15% blue collar, semi-skilled to skilled

8. National Entrepreneurship Network 8© John Mullins, 2012 TeamLease Temps 99% stay employed: “Putting India to work” is a reality –22% same job, 6-9 months average –24% same company, different job –53% another company in TeamLease portfolio –Longest serving person is now 7 years!

9. National Entrepreneurship Network 9© John Mullins, 2012 Some Lessons Learned Uncertainty about regulatory issues can be an entry barrier Doing the right things – “Putting India to work” – can be an important asset Protecting yourself against the legal challenge –Become too big to shut down –Become the labor market experts

10. National Entrepreneurship Network 10© John Mullins,2012 More Lessons from Manish Hire top-notch people as early as you can Take other people’s money as late as you can

11. National Entrepreneurship Network 11© John Mullins,2012 A Lesson about Business Models Temps’ salaries are paid when the company pays, plus taxes, benefits, and 7-10% markup But taxes and benefits can be paid out later = negative working capital = a growth machine

12. National Entrepreneurship Network 12© John Mullins, 2012 For more on Business Models…

13. National Entrepreneurship Network 13© John Mullins, 2012 Key Challenges Going Forward The education problem –Too few can qualify for jobs: only 3.6% (B case, Exhibit 1) The employability problem –“I did my MA in English – in Hindi!” –More than 80% of new engineers are not employable –MBAs, too

14. National Entrepreneurship Network 14© John Mullins, 2012 The TeamLease Solutions Acquired an education and training company, IIJT, in early 2010 –Reddy: “If we cannot find enough employable talent, we’ll manufacture it.” 2011: Set up 22 community vocational colleges (TLU) in Gujarat with industry involvement, apprenticeships embedded

15. National Entrepreneurship Network 15© John Mullins,2012 Was This a “Perfect Storm”? Note that “perfect storms” are never “perfect” on all seven domains They require teams and strategies that can offset or mitigate the risks In emerging markets, as entrepreneurial risk and opportunity both run on steroids, such strategies often run counter to western practice and advice