In 2015, NYSE-listed and Newton, Pennsylvania-headquartered technology company EPAM systems entered India through the acquisition of software solutions provider Alliance Global Services, which already had a presence in the geography. A decade since then, from just over 1000 employees, India now has become the largest single location delivery centre with nearly 11,000 employees working in 5 cities. In an exclusive conversation with Fortune India’s Rukmini Rao, the company’s CEO, President and Chairman of board Arkadiy Dobkin discussed the changing technology landscape, Ukraine war and what 2025 holds for his company.
Edited excerpts.
Fortune India: You have been in Indian for 10 years now and the geography delivers higher than average profitability for the company. Can you explain the factors that really works well for you in India?
Arkadiy Dobkin: I think answer to this also is unusual conditions for EPAM because if you think during 2020-23, we moved around 12,000 people from our traditional locations around the world, and because some of this was emergency move then, it’s not necessary was optimal from any profitability. India from this point of view has a very right balance and stability of rates and cost. But it’s also important to understand also that current profitability in our opinion is not necessarily the profitability which we see in the future. Because the last two and a half years was subject to very different market demand for the primary type of services which we do. Because we built new solution, new platforms and this budget was unproportionally cut versus keep the light, run the business. Okay, so we are utilising a lot of our talent today not in optimal engagement because of the market conditions. But we strongly believe that if knowledge will drive clients to replace and modernise a lot of stuff which was done during the last decade, all this with additional maturity, this preparation which would bring us to different drive and different capability across all locations including India as well.
Fortune India: Now with solutions to the Ukraine war being under serious consideration, is the company considering a return to the Russian market or reshoring work to your traditional European countries?
Arkadiy Dobkin: It’s a very difficult topic, so we officially exited Russia, we shut down all business and we don’t have any presence in Russia. It was several thousand people who left Russia and moved to different countries as part of our talent base, an important part of our talent base, but right now we don’t have any intentions to come back. On Europe, it’s all question of demand because if you consider the current demand, it’s challenging, okay. We organically grew last quarter, only 1%, we hope that will change when maturity of AI technology platform grow. As soon as this type of demand recovers I think it would be cross geographical growth for us, because most of Eastern Europe is not growing or downsizing because of the proportion of cost for such demand (AI Tech). I think India has established itself during the last years as a strategic destination, and it will be very much strategic part of EPAM, but some other talent hubs will start to grow as the demand grows.
Fortune India: What is your outlook on 2025 and where do you see the growth pockets for EPAM ?
Arkadiy Dobkin: It’s definitely more promising than it was in 2023 and in 2024 because the second part of 2024 was pretty good for us in comparison to the previous two years and we see more relevant demand starting to grow. Because during 2023 and part 2024, definitely in the second part of 22, we lost a lot of business because of the risk factor, geopolitically, but also because demand sharply changed from build to run. A lot of clients started to tell us, we don’t need this quality of talent to do this type of task and started to switch to some of our competitors. During the last year we saw cases where some of this decision proved to be wrong as quality of service deteriorated so much is started to come back to us plus, we lost multiple deals just of course, which was kind of in our classical portfolio and it wasn’t delivered successfully and clients coming back.
Some clients never left us, but they decreased significantly in proportion to the business, and now they have started to come back because of the quality. We see this return and on top of everything discretionary spend is slightly better, GenAI is moving from POCs to more kind of platform production and build at scale.
Elaina Shekhter (CMO & Head of Strategy): Maybe I can pick it up. So, I think there’s a couple of things that we see going on from a demand perspective and that’s driving moderated optimism on the outlook. Specifically in India we have a significant amount of demand coming into India, not just from GCCs but from our enterprise clients who are looking to kind of rebalance their partner portfolios. There’s a lot of consolidation going on. EPAM India offers hybrid solution between going to a low-cost India service provider and then something that’s slightly more premium with the quality that our clients expect from EPAM Global, so that’s one.
Secondly there is a broad-based conversion of POC level AI programs and things that started as R&D, now turning into solution build and deploy programs. We have some limited optimism that this trend will continue around AI and that AI demand is actually driving demand for our core services in advanced engineering and in data and modernisation work because most of what has to happen in order to really turn on AI at scale depends on readiness of things like data foundation and data architecture and overall kind of modernisation programs that have yet to be completed.
The third thing we’re seeing in this sector is, some pressure from global industry demands to go quicker. I mean, certainly this is true in financial services with respect to AI and it’s also true in several other verticals like life sciences for us and we think that that is going to continue going into this year.
