Octo Consulting Group targets hot market niches such as health IT and big data for growth as it expands its offerings.
Mehul Sanghani started Octo Consulting Group in June 2006 by borrowing money from his parents, maxing out his credit cards, taking out a second mortgage on his townhouse and selling his wife’s car. He had to scramble to find the capital to hire his first five employees.
Six years later, Octo’s employee roster has grown to 110 consultants and about 20 contractors. And the company has carved out a niche designed to insulate it from the budget uncertainties in the government market.
“The growth has been exponential,” said Sanghani, the company’s president. “I don’t think when I started out six years ago I could have fathomed that the growth would have come like this.”
The company is making a repeat appearance on the Fast 50 at the No. 42 spot with a compound annual growth rate of 81.46 percent. Its revenue has grown from $2.1 million in 2007 to $22.7 million in 2011.
Sanghani attributes his company’s success to “the differentiators that we’ve preached,” including an employee-centric culture, its positioning in expanding government micro-economic markets such as health IT and big-data analytics, and its ability to retain customers at a 98 percent rate.
When Sanghani launched Octo, the firm initially concentrated on providing IT management consulting services to federal CIOs
“There are a lot of companies out there that focus on IT, but we saw a huge gap in the marketplace relative to small businesses bringing senior management consultants to the market,” Sanghani said. “We wanted to be a premier IT management consulting firm focused on the federal CIO market, providing independent, objective advisory services to CIOs when they needed unfiltered advice on key IT decisions where business and IT come together.”
Accomplishing that goal meant luring experienced IT and business consultants to a small but growing firm. What he found was a pool of sharp, midcareer, 30-something consultants who had been working at large companies where the organizational culture mitigated opportunities for advancement.
“One of the keys for me was building a unique culture to attract top talent that was frustrated with the environment at those firms, where they have to do a lot of ring kissing to move up the chain,” said Sanghani, who had worked as an IT management consultant at Booz Allen Hamilton and Gartner Inc. before starting Octo. “I think we had success with that early on.”
In recent years, Octo has added IT deployment services to its expertise in management consulting, giving the firm another growth driver, Sanghani said. Octo not only blueprints IT systems for its customers, it also brings in the engineers and developers to execute those systems.
“Initially, we went reluctantly into [execution] because we wanted to stay true to just providing advice, but now we’ve seen tremendous growth in supporting customers on the execution side,” he said.
Octo’s special experience and acumen in pockets of growth such as health IT — it has landed several prime vehicles in the past year from the National Institutes of Health, for example — big data analytics and cloud computing will help the company maintain financial stability in a tough government market, Sanghani said.
“For us, it’s continuing to do what we’ve done well, which happens to be in micro-economic areas that are poised for growth despite the fact that the macro-economic environment is pretty bad right now,” he said.
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