Houston Business Journal - by Mary Ann Azevedo

Focusing solely on Houston for its first five years in business has given IT outsourcing services provider a solid platform for growth

Craig Hartley/HBJ
Hugh Sazegar of Techcess Group: Wants company to become ‘the EDS and IBM of this world for small and medium-sized businesses.’

The firm, which has been profitable since its second year, did $100,000 in revenue in its first year and $1 million the year after. By 2006, revenue had climbed to $2.2 million. It crossed the $5 million mark in 2008.

For investor Pierre Fontaine, managing partner of Revolution Capital Inc. in Quebec, the company’s vision seemed solid from early on.

“We know a lot of companies here in Canada that did a similar thing and did make it very big,” he says. “We’re not saying that will be the case here but, hopefully, it will continue to grow.”
“Even in these challenging markets,” notes Fontaine, “they’re still doing very well.”
In starting Techcess Group, Sazegar, who is president and CEO, had very specific strategies that, thus far, have served him well.

First, he decided to focus entirely on Houston for the first five years.

Now, five years later, the firm is ready to move on to other markets such as Austin and San Antonio.

“We’ve proven that the model is working really well in Houston,” Sazegar says. “Once we prove it in other Texas cities, we’ll be in a good position to raise more money and attack 20 different cities in the U.S.”

Five-year plan

When starting the company, the co-founders decided to start looking at acquisitions after five years. In the meantime, they have focused on partnerships with companies such as Microsoft Corp., Dell Inc., IBM and Hewlett-Packard Co. and companies such as CPA and human resource firms.

“This helps us get referrals and access to customers,” Sazegar says.
In fact, he says that, early on, the firm spent more than it should have on advertisements and marketing.

“It doesn’t always pay off,” Sazegar says. “Especially in a B2B market. It’s very difficult to get business from an advertisement. It’s much better to have referral programs in place.”
In terms of products and services, the firm has, since the beginning, been focused strictly on infrastructure.

Recently, Techcess has placed an increased emphasis on data centers and cloud computing, which allows for the virtualization of a server and shared environments. It also can help companies avoid buying new software and hardware.

“Right now, 50 percent of our new customers are turning to data centers,” Sazegar notes. “They don’t want the hassle of disaster recovery.”

Hurricane Ike, for example, proved to be a huge boost for the business, he says.
From a segment standpoint, the company has made an effort to diversify. Its 150 customers are spread out among oil and gas companies, law firms, financial firms, manufacturing companies and investment banks.

As such, Techcess has been able to continue to grow even in this difficult environment, according to Sazegar.

In general, he says, Techcess Group’s biggest competition is a firm’s own internal resources.
A recent oil and gas customer with 250 machines (computers and servers) employed five IT workers. After signing on with Techcess, the company let go of four of them and halved its costs.
That’s the premise by which Techcess operates — promising to save a company 50 percent while providing better service. And costs are always fixed on a monthly basis so there are no surprises.

Over the years, managing employees has been a constant challenge, according to Sazegar.
Learning when to cut employees loose has been a hard lesson to learn.
“When you have bad employees, it’s better to get rid of them right away, rather than wait,” he says.
“You also have to react in hiring good people very quickly.”

In terms of recent successes, the firm points to its work with the Emergency Health Centre, a $10 million facility that is completely paperless in an effort to drastically reduce patient wait time.
Sazegar says he learned quickly to never let a customer feel unappreciated, no matter the size.
“You have to be close to a customer and not take them for granted,” he says. “Having a great service is not enough. They have to feel loved.”

For investor Fontaine, the experience of Sazegar and his team was a big selling point in investing in Techcess Group.

“They were very good at what they did and were able to apply their knowledge in an area that larger companies don’t even look at,” he says. “They saw there was a niche there and jumped right in.”

They could take the safe route and accept the executive positions being offered to them by Atos Origin, or they could take a chance and branch out on their own.

They chose the risky route. Using some of their own savings and raising money from a Canadian institutional investor and a Houston angel investor, the pair — armed with doctorates in electronics and engineering and years of experience — founded Techcess Group in Houston.
“We started at the right time in the right market,” Sazegar says. “We took a big, big chance ... If we were to start the company now, I wouldn’t do it.”

At Schlumberger, Sazegar and Chapellat were in charge of about 6,500 people as part of a $1 billion division.

Sazegar held such roles as president of infrastructure outsourcing, president of networks and e-transactions and vice president and general manager of point-of-sale terminals. Chapellat served as general manager of service delivery for Schlumberger’s global service management centers, vice president of network solutions for the Asia division and manager of IT consultancy in Japan.

Focusing in

While Schlumberger provided IT outsourcing services for a wide range of companies, Sazegar and Chapellat saw the value in focusing exclusively on small and medium-sized business.
Techcess Group’s goal, Sazegar says, is “to deliver the same type of services to small and medium-sized businesses that larger companies are enjoying and benefiting from.

We want to become the EDS and IBM of this world for small and medium-sized businesses.”
So far, so good.