Comviva Exploring New Frontiers (A) Case Study

Assignment Task

In March 2020, every business in the world experienced an unprecedented event: the coronavirus pandemic. It brought work life to a stop and public healthcare to breaking point. As of March 23, India was under a nationwide lockdown to contain the spread of the infectious disease. Comviva, too, was handling new ways of operations and reckoning with a new set of customer demands. How would this pandemic affect its long-term strategy and its plans to expand?

Business Disruptions

The first impact of the pandemic was on revenue. In the last few months of the financial year 2019- 20, some projects could not be executed on time, while customer orders started falling through. Facing uncertainty and in a bid to save cash, customers were “de-scoping,” or scaling down existing projects and delaying transformative ones. Due to business disruptions, some banking channels and the supply chains within customer organizations had experienced a slowdown, leading to lower payment collections. Since Comviva’s customers were mostly large and stable conglomerate telecom groups with strong financial resilience, it assumed that this would be a temporary situation lasting only a few quarters, but the impact on Comviva was immediate.

Comviva India estimated it would fall short of its annual revenue target by 25%, and the business outlook for the following year, 2021, looked muted. In the short term, the setback would mean shifting growth plans by a year or two. For at least three months, from March to June of 2020, other than skeletal IT support staff, most Comviva staff were working remotely, the first time in Comviva’s history that there was such a widespread and long-lasting move to working out of homes. Teams had to learn how to deliver projects and close customer orders remotely, and the business support functions had to learn how to help remotely. Customers were also available only via digital media, so for the sales team to engage and get focused time with them was a challenge. Since customers were finding it difficult to pay on time, Comviva aimed to conserve enough cash to ride the storm out until business operations stabilized.

People Costs

To reduce personnel costs, Comviva instituted hiring and salary freezes, pay cuts at senior levels, and deferred variable payouts such as increments, variable pays, and promotions. They re-evaluated the role of all external contractors and only kept those deemed essential.

To retain high-quality talent, Comviva did not lay off any of its highly trained personnel and honored the job offers made before the outbreak to new hires from engineering and business schools. Through digital learning, Comviva tried to ensure the smooth onboarding of new hires as well as learning opportunities for all employees.

Cost Structures

The transformation team was working on a return to profitability and a positive EBIDTA amount by investing in research and simultaneously trying to make sure the investment in future research and development and in people was still a focus.

Comviva aimed to modify its permanent cost structure while maintaining investments in areas that would deliver growth. This included, for example, Comviva’s new start-up, Factoreal, as of 2019. Factoreal provided a cloud-based omnichannel automation strategy to clients, to help them with marketing outreach, customer engagement, and simplified marketing technology. Factoreal’s customers in North America and Western Europe. YABX, a financial technology start-up Comviva incubated in 2017, was also an investment focus. YABX offered banking solutions to unbanked customers in Asia, Africa and Latin America.

To ensure customer retention, Comviva focused on sales and on enhancing their end-customer efforts.

Future Plans

Comviva remained optimistic about its future growth prospects, with no change in its strategy. Investments in mobile financial services continued. Comviva retained its investments on the upcoming markets of Latin America, Europe, and North America. Comviva was also increasing its efforts on enterprise sales and analytics, covering industry verticals like banking and financial services.

Comviva had succeeded, to some extent, in its plan as of 2019 to expand into developed markets. The investment in Factoreal was one step in this direction. After a soft launch, Factoreal had met with an encouraging level of initial traction, especially in the United States. Comviva felt the work-from- home scenario globally, as well as the reliance now on personalized digital marketing, would help drive growth in the business.

Comviva was also aiming at inorganic growth targets and was in initial conversations for some partnerships in this area. The impact of the coronavirus pandemic on the inorganic growth strategy was expected to play out in two ways. On the one hand, the valuation of some potential target companies might be lower. On the other, sellers might be reluctant to sell amid the disruption, especially if they had staying power, and deal-making was dependent on face-to-face meetings, which were restricted in the current environment.

Customer Demand

Services like the KYC feature (Know Your Customer) for the financial services market, done online or through video, would become increasingly important as would contactless customer service for telecommunication companies. Since telecom counted as an ‘essential service,’ all the more critical as the entire country’s white-collar workforce worked from home, there was no reduction in customer demand. In fact, there was a rise in demand. Telecom customers not only needed connectivity for internet and phone usage, but they were also playing more mobile games and watching more video streaming content, given their extended time at home.

Comviva had managed to provide support to telecom providers, even in peak load situations, even though Comviva was innovating on cloud delivery and remote deployment technologies. For example, Comviva’s client, a digital wallet provider in Egypt, earlier had retailer-based registration at shops, but now launched a self-registration service, to ensure that more people could register for the digital wallet from home and remotely transfer money and pay bills.

The challenge here included clients’ security systems especially for cloud delivery and integrating with third parties of clients’ network infrastructure. In addition, time zone and language differences made delivery challenging. Issues in ensuring seamless and smooth product deliveries to customers, especially when they were used to in-premise or in-person implementation and support, were also a new challenge. Comviva had to learn how to do this with just its skeletal IT infrastructure staff, and everyone else operating from their homes.

The uncertainty of the pandemic for employees, customers, and the country led to an unexpected business environment and a radical shift from just a few months before. With no slump in demand and given the essential nature of telecom as a service, Comviva counted on growth to resume by the last quarter of 2020-21. Mao couldn’t help but wonder if he was too optimistic.

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