Interview With Sal Quadrino
Interviewer: Andrew Zezas, SIOR
Following is the transcript of a CFO Studio interview between Andrew Zezas, CEO of New Jersey based Real Estate Strategies Corporation and CFO, Sal Quadrino of Helios and Matheson.
Visit www.CFOstudio.com to read about this interview and to watch the entire video interview.
Andy: Hi, this is Andrew Zezas, President and CEO of New Jersey based Real Estate Strategies Corporation. We’re here with you again today, as a part of our Financial Executive Thought Leaders Series, and we have the pleasure of interviewing Sal Quadrino. Mr Quadrino is CFO of Helios and Matheson, a global IT consulting firm. Mr. Quadrino serves in the dual role as that company’s CEO.
Zezas: Sal, it’s nice to see you.
Quadrino: Good morning Andy. It’s very nice to see you and thanks for having me.
Zezas: Thanks for being a part of our interview series. Sal, you have a pretty diverse background. Your expertise span multiple industries. You’ve been a part of public and privately held companies. You’ve been a part of, let’s see, telecom, e-commerce, hi-tech, distribution, start-ups, turnarounds. You’ve done a lot and I’m excited to have you here.
Quadrino: Thank you very much.
Zezas: I’ve got some great questions and I know that you and I did some preparation for today, so why don’t we just jump right in?
Quadrino: That’s just fine with me.
Zezas: Great, great. So, given what’s going on with the world today, we have a very funky economy. A lot going on and a lot going in different directions. Let me ask you the first question: what has been more troublesome, revenue weakness for most companies or expense management, and in that context, how are most companies remedying those issues?
Quadrino: I would say everyone, most companies, if not every company, has been struggling with the economic downfall and crisis that we have been faced with. And, during those times, obviously the focus is on cost reduction and cost control. And so, what you see is an elevation of the role of CFO because he’s the one companies would turn to in that kind of environment. It’s interesting, when I was in the air freight business, we used to refer to it as matching the lift to the load. Understanding how much, how many packages you needed to deliver, and adjusting your delivery system to accommodate those packages. But, in all seriousness, Andy, that can only go on for so long. I was never a believer that you can solve a revenue problem through cost management and eventually you have to start focusing on cost. You all think here that CFO’s say they like to be partners with the CEO’s of the companies they are with. As you get to know the client better and develop that reputation for delivering quality & services that meet the client’s needs, what happens at that point is you start looking for additional work that comes from the client that may be longer in term. Let’s talk about the projects that may be beyond six months or twelve months or longer and, then, of course with that comes the higher margin business that you look to get yourself into. These are all avenues we obviously explore at Helios and Matheson. The other thing is, too, when you look at the cost side is how to deliver those services at an appropriate cost. You develop that reputation for delivering quality and services that meet the client’s needs.
Zezas: So, what I heard was that the company focuses primarily on its existing customers. Not only improving services, but improving their profitability by virtue, by looking at how else you can be of service to those guys.
Zezas: And, I have to tell you, in too many instances, companies focus more on new customers and not on their existing customers and I’m very happy to hear you say that.
Quadrino: Thank you.
Zezas: Let’s talk about profit, gross profit maximization. How have companies been able to do that today, in light of the economic environment, by reducing costs? How are they maximizing gross profits?
Quadrino: It’s interesting, you say maximizing gross profit. I think what’s going on today, is maintaining gross profit as much as maximizing, obviously, there’s a cost side to that. But, take our industries in particular; a lot of clients are coming to tell us what they believe they can pay for the service. So, the real challenge becomes, how can you provide that service, provide the quality and yet how can you do it and still maintain your own margins?
Zezas: And, hit their price point at the right time.
Quadrino: Exactly right and margins are getting squeezed. So, you need to figure out how to provide the services, yet maintain those margins. And for us, that lead is to do more off shoring. As you well know, our company has a significant relationship with India and our parent company is actually in India. As a result, off shoring became important to us.
Zezas: That’s interesting. Are companies doing a lot more off shoring or going back the other way?
Quadrino: Let’s talk about off shoring and then you hear outscoring because people, I think, confuse the two terms. Outscoring has been around for the longest time. When I was in the air freight business, one of the things we did was to move some of our back office operations from New York City to Scranton, Pennsylvania because it was a lower cost area that we could work in. Plus, we felt we could get a very high quality work force there. Companies have also moved hubs into the Midwest and alike. And, the other thing companies did was to start their focus on what was their core business and basic thought process there is I’ll focus on what I know best, and what I don’t know best and I’ll outsource to someone else. A good example is…I doubt there are many companies that do their own payroll.
Zezas: So, what we’re seeing is a little bit of both.
Quadrino: That’s the outscoring. That’s step one from my perspective. Step two is you’ve crossed that bridge whether you go to Scranton, Pennsylvania to Dayton, Ohio or Bombay, India. What’s the difference…and the difference is technology. In today’s day in age, with the technology improvement we see, outscoring to countries like India and the Philippines or where ever else in the world you want to go is a no brainer.
Zezas: It can be anywhere.
Quadrino: Exactly, the world has gotten much smaller.
Zezas: Sal, we’re about out of time. Those are very insightful answers. I think we could have gone for hours. That is some really great stuff. I want to thank you for being here today on Financial Executive Thought Leaders Series. I appreciate your time, concepts, and comments. And, I appreciate you being here.
Quadrino: Thank you very much Andy.
Zezas: This is Andrew Zezas, with Real Estate Strategies Corporation and Sal Quadrino, saying thank you very much for visiting us today.
Copyright Real Estate Strategies Corporation 2010. All Rights Reserved.