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Sambas and Gabbars are everywhere in Indian Industry

By Nilesh Gamit on 48 Comments / 5657 views

I liked the story narrated here by Ashwin.

I am running a web design and development company in Surat, Gujarat since 5 years. we have a team of 10. We are mostly working with overseas clients.

I don’t come from a business family as my father was a clerk in bank and my grandfather was a farmer. My father wanted me to keep doing a job, but I had a dream to start my own business. So, I left Yahoo! in 2008 to pursue my dream. I have been learning business tactics since then.

Let me come to the point.

4 years back, we had started working with Indian companies and my experience turned out to be very bad.

Company A

A Mumbai based company (a known property portal) outsourced it’s development work to us from 2009 to 2012.

For 1st year, we got regular payment every month. After that, a delay in payment had been started. Sometime I had to follow-up 2 or 3 times to recover monthly payment. So it was a delay of payment cycle every month.

Then they adopted another strategy. They started paying partial, whenever we pushed them to pay. We kept working for them on their new tasks, in hope to get timely payment. But the pending amount got increased as time passed.

So, at one point of time; I decided to stop working further with “Company A”. Now at our side, clear disagreement started between me and my old partner (he is no longer associated with our company and he was handling project management and technical side, when he was part of our team). My old partner has friendly rapport with “Company A”s directors. So, even if he was well aware of delay of payments from them and their false commitments, he worked for them whenever they had any urgent issues. Moreover one time, he got invited to attend “Company A”’s annual party and he attended it. Seems he did not have any concern about company’s payment issue.

All such things stopped me to take any hard actions against “Company A”. Additionally, my old partner was my college time friend and I was also not sure what to do in this condition. I tried to talk to my old partner as a company point of view but he did not understand and continued fixing their work without acknowledging me. And even though I knew he worked for them, I could not have hard words with them as it would have certainly ruined my relationship with him. 10 years of friendship.

One day my partner wanted to leave the company and I didn’t stop him. He didn’t think it’s important to discuss about pending payments from the client.

Learning Lesson

“If your partner does not show concern about issues company is facing, No matter how good he is in another areas, he is just another highest paid employee of your organization.

Finance is the only thing which tells if your business is doing well or not. Even if you have a great and skilled team, but if it does not help in bringing revenue to business, they will become overheads after sometime.

Choose your business partners wisely. A good friend is not a guaranty to become a good business partner. Partners must share mutual vision. When you realize, vision and goal are no longer same, just split up as fast as you can.”

“Company A” gave many reasons for delay in payment e.g.

(1)    “Our accountant has left and we are not able to hire new accountant yet, please wait for a month.”
(2)    “We are moving into new office and still struggling to manage payment, please give us more time.”
(3)    “Our company got split up, we are in bad shape. So please bear with us.”
(4)    “We are getting new investors on board soon, so all payments will get clear soon etc.”

In the last 1 and half years, I wrote many emails but what I got was “false promises” every time. One time, they accidentally transferred more money than what they promised in process of clearing pending payments. And they requested us to pay back as it was scheduled to pay another vendor and they promised to pay next month. Which I did but, that next month never came.

After sometime, they stopped replying emails and phone calls. I don’t remember the number, but I have written more than 30 emails to them so far.

One day, I got call from MD of “Company A” after long time (in Feb 2013). I got surprised. He started telling, “Nilesh, money is not going anywhere. We are not people who eat others money.” and told many other nonsense things.

Then he came to the point. My old partner was handling their project and “Company A” wanted some work to be done. My old partner had started working on his own and “Company A” wanted to go with him (obviously). They both didn’t want to look bad, so they asked casual permission from me, if I had any objection. I replied “it’s your choice. My old partner is no longer part of our team and you are just one client for us and we don’t have any agreement in place that you can’t work with others. I care most about commitment, ethics and values and nothing more from you.”

He promised again to clear payment by end of March 2013 and it was another false promise.

Just 2 weeks back, I pinged him on messenger and he immediately got offline 😀 and as usual no reply of email/phone from anyone from “Company A” anymore.

The MD was in my FB friend list and all I saw on his timeline was “got new Audi”, “got new luxurious flat”, “Having nice weekend in Goa” etc … I just removed him and his team mates from my FB friend list. A person has time to update FB status, but has no time to reply email/phone 😛 

Worth to mention, he got “Young Entrepreneur” award in past 😉

The money stuck with the company is around 2.5 lacs. Now, frankly I don’t want to spend my money and time on lawyers, just because I want to keep my mind focused on other good things which helps my organization to grow.

But I am very disappointed with so called two-faced people. We worked for 3 or 4 months, without being paid or paid partially in hope, we will get paid one day; And I had to put some of my personal savings to make employees salary on time.

Company B

Another company we started working on is Bangalore based firm. They appeared in The Economic Times, Plugged.in, Business Today etc.

This is how they work. They give you requirements, which is never 100% clear and they asked you to work in fixed budget. Once you agree, they add more requirements in later stage and they want you to work on it without considering extra time and money. We used to work on 2 or 3 projects with them.

Once work got completed, they promised to pay as soon as they received project sign-off from their end client. We got some payments after my repeated inquiries. To recover rest of the payment, I sent them many emails. Their CEO and other management persons promised to look into the matter saying, it got missed and it will be getting clear as soon as possible.

That time never came. Here also, we received false promises many times. It’s not that big amount which is stuck, but the time we spent to help them to run their business is valuable to us.

I’ve email communication as a proof of their repeated false promises for both organizations.

I don’t understand one part here:
Why people can’t be transparent in communication and say, “Hey Nilesh, we are fcuked up. We can’t pay you. Just consider it as charity work you did for us and forget the payment”.

And I might have granted their wish with peace 🙂

Its a learning lesson for me, what not to do when dealing with a bigger company, who has self claimed right to ignore small companies, when it comes to Money 🙂

I have intentionally not named the companies in this post as I’m not sure if it’s right thing to do in public. Also my objective here is not to complain but to seek advice from more experienced rodinhooders as to how to handle such situations in the future.

@Alok and others, I really need advice on this. And thanks for reading this lengthy post.

Thank You
Nilesh Gamit, nilesh@lamp-technologies.com

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48 Comments

  1. i think i learned that dont trust a company because they are big ..!

  2. I am vomiting while reading this story.

    CAN YOU PLEASE TELL ME COMPANY A, B, C, D, E NAME AND LET ME ALSO PAY THEM A VISIT????

  3. Sure Alok. Thanks a lot for your concern. I am very thankful to you for providing your valuable time and support in this regard. Sending you details in message.

  4. Nilesh – mail me on alok@rodinhood.com

  5. This is really a bad showcase from Company A,B,C,D — ; Even we are facing the same problem with some A,B,C,D company; i believe the reasons are almost and always same for all.

  6. Hi Nilesh,

    Sorry to hear that. That is really fucked up on their part. Please let me know the names as well. So I can add them to my “Don’t do business with them” list.

    email: ankit.j.arora@gmail.com

    Thanks.

  7. Alok – Just sent you an email.

  8. Follow strict business rules / Policies. Sometimes even let go a project if client is not agreeing to pay. e.g. Split payment at each major deliverable. Remind them after every 5 days. DO NOT DELIVER next package if previous payments are not clear..  believe me this helps a lot!!!

  9. i can visualize being in your shoes as have faced similar people before . 

    Lessons that i learnt 

    1) i should not accept requirements as final word but become a part of their process to create the exact requirements that could benefit them and charge them to include this one . 

    2) dont work with companies who do not value tech teams too much . generate processes , value so that we are always positioned as tech solution creators and not just as a programming / designing team 

    3) take 100 percent advance before allocation of resources as allocation is the point in time when you start spending  money for them .

    4) network and try to figure out black sheep before they call me up . do in depth background checks and talk to the direct buyer and not deal money with intermediate dummy gatekeepers / employees . cheating is done by direct buyer of services and not by their employees we talk to . 

    as with all lessons – easier said than done 🙂

    cheers , 

    karan 

  10. Hi Rahul

    Yes.. your advice is really helpful. 4 years back, when we were bootstrapping, we got clients/projects though references, mostly reference from friends and relatives and it’s my bad, I didn’t have clear guidelines to follow. It just started with faith and hope 🙂 But I guess I learned my lesson …

  11. Isn’t this a Co-incidence.

    An hour ago, I called an Electrician to do some small work of my office.  

    He Walked in While I was reading this Blog. And while working, he told ki I was sleeping when you called up. And I wondered WHY so on a working day.

    He said, have done work for 2 big projects in past 1 Month and from both the places, I have not received the payment.

    So Socha “Ki ab kaam hi nahi karunga, Payment to milti nahi” 

    How much it hurts when one does some work and it is unpaid. A Person Reaches to the Stage, where he loses confidence in himself and does not work on further.

    Happened with me too…… Shared in the last Para of  The Gift of Lessons, My Gifting Company Taught Me.

    Will Call the people who owe him money now and will ensure he does not leave confidence in himself and his work due to some idiots.

     Photo of my Electrician doing work in my office, Right now.(Apologies for Tilted Image, Tried, but cannot rectify)

  12. yes this one helps . 

  13. Nilesh

    Please put the names of the companies, so that we do not deal with them. 

    Also, why do you think it is not proper to name them publicly? They r*ped you and you are unwilling to take their names?? If you are convinced of the righteousness of your position, then name them. Why this reluctance? Would you like if they take another company like yours for a ride?

    In fact It is precisely this refusal to go the last mile that these companies keep on doing what they do. I would really like to know why are all of us so unwilling to put in the real names?

    Vinayak

  14. Yes… this sounds good professional guidelines to follow, if one need to survive in business 🙂

  15. That’s really bad and disturbing. For a new implementation project:- suggestion is to divide the entire deliverable into smaller chunks or stages. That’s how many big companies do. For example Entire project is divided into the stage 1, stage 2 and stage 3. As soon as you release stage 1 of deliverable, you get 30% of payment, and when you deliver stage 2 and stage 3, you get respective 40% and 30% of the payment.

     But at the end Nilesh what happens is a learning brother. 

  16. hi rahul,

    do you think you could do a post on this topic that includes simple advice in steps?

    i think it would add great value!

  17. Hi Ankit,

    There is one company whom we have sent the legal notice last week for doing such a thing to us. Could you please let me know how you would be putting their name in “Don’t do business with them”.

    Thanks and regards

    Dr Amit Dang

  18. Dear Nilesh,

    Dont hesitate to showcase the name… Its they who shd be on receiving side…

  19. Try “Akosha”.
    http://www.akosha.com
    They are one forum where customer complaints regarding big broadband operators have been handled in a legal way and people have got results. 

    Unaction often doesn’t signify good intentions, it may signal fear to take things head-on.

  20. nilesh,

    ankur of akosha is a rodinhooder in case you want to reach out to him!

    https://www.therodinhoods.com/forum/topics/the-story-of-a-startup-called-akosha

  21. Please share names…it would help others…

  22. I won’t hesitate to let everyone know the name of the company who is giving my company a trouble since last 6 months. Wont be able to put the whole story down due to time constraints,but the company’s name is Bioquest https://bioquestglobal.com/, whom we have sent legal notice last week. The story is somewhat on the same lines as told by Nilesh and now they are not giving us the pending amount, after constant reminders/ calls/mails etc. and always come up with lame excuses. They get major business from China and try to make all the payments too from their China office to save service tax as well, which they are suppose to give to Indian govt. Nevertheless, we would try to drag them to court in case they don’t reply back within one month and we have already got the acknowledgement receipt of the legal notice that has been delivered to them. All the healthcare companies and free lance medical writers, if you are reading this post of mine, would alert you to take project from them at your own risk. To be on a safer side, take 100% advance payment from them. 

    In case if this doesn’t work, undoubtedly we would be going ahead actively on social media about the whole story that has happened to us and will share the same on various healthcare forums. 

  23. Good suggestions. I’ll keep that in mind.

  24. Sadly, we are doing through this issue too with few of our clients.

  25. Yupe … failing, learning and rising again .. 🙂 They (Company A) assigned tasks per month basis and at the end of the month, we were sending worksheet and invoice to them for payment. However, as you said for projects with fixed requirements, its good to have different stages as you’ve mentioned.

  26. Sure Asha, I’ll be in touch with Ankur. Thanks for the pointer 🙂

  27. Hi Gurpreet, read your story. Thanks for sharing your valuable learnings 🙂

  28. nilesh.. its really brave of you to slug it out, this is how many people think they will be successful in biz

    I wont ask for the co. names… but really hope they are reading this and feel ashamed… and pay up

  29. If you do not want to work with these clients again, I suggest you have a separate section in the “Clients” page on your website.. you can mark it “Clients worked for in the past but yet unpaid” and write the amount against each one. Another idea would be to put this up on your FB. If any of your clients have a social media unit, you are sure to get a reply (if not payment). I believe public shaming (made possible by FB and twitter) are useful in such cases.

  30. Hi Nilesh

    We are currently dealing with 3 clients who have not been paying us money despite repeated promises. The fun part is they still call us to brief us on more work and when we talk about payment, another reason crops up. 

    The other fun part is when we call them, they don’t pick the call. Reasons they give later when being confronted while briefing us work are funny. Let’s not get into that.

    There is no definite solution. But we have tried to resolve some. We have around 70k stuck with Ministry of Social Justice and Empowerment due to the reason that their account employee got transferred somewhere else. Since then we were just given false promises and no result.  We gave up.

    As small companies, the options that we end up choosing are: to leave the client, give up, wait and wait and wait with no concrete solution. For us, court is a complex solution and we wouldn’t choose that. And the clients we are talking about are big/major players with revenues in crores. They hire small teams like us to get quality work and attention to their projects and then refrain from paying, as they know we would stay away from any legal actions against them. 

    I am thankful that you posted your issues and I am looking forward to some solution to this which perhaps would save me from any such future experience. 

  31. This is ridiculous.I think people have an opinion that, even if they do not give payment on time, what is this small time guy going to do? If your contract clauses permit you, it would be a fitting lesson to take their names out and let all others add them in “do not do business” list.  We should have one more startup that will just help startups recover their hard earned money from these so-called big businessmen!

  32. Thanks Mahesh. I really hope so.

  33. Hi Sriram, agree with you on this. Public shaming works in many such cases, else people hardly listen. And even if they listen, they hardly act unless they start feeling the same pain 🙂

  34. Hi Anamika

    Thanks for your note on this issue. It’s bad that, many time we need to give up for exactly the same reasons you’ve mentioned. I am sure, our active rodinhoods community is the right place to get suggestions and nobody can ignore the power of social media. As @Sriram mentioned, “public shaming” works many times 🙂

  35. Hi Saraswathi, 

    I do think so. After sometime people start taking you for granted if you don’t take action 🙂 I learned my lesson, but its good to have many more suggestions from rodinhooders to solve similar issues. Though “Public Shaming” is a good option, as it works most of the time unless you are legally bind.

  36. Hi Nilesh,

    You’ve surely struck a chord with a lot of people going through the same ordeal. To give you a perspective on why corporates end up doing this is because it all boils down to Cash Flow management. I know a lot of companies that have annual performance metrics tied to two things:

    1. How early can you get payments from the customers (typically get it under 30-60 days)

    2. How late can you pay the vendors (typically post 90 days).

    So, a lot of times, individuals that you might be dealing with are themselves under lot of pressure to achieve their targets on cash flow.

    However, that being said, it’s no reason for them to behave poorly…we as startups are also in the business to make money and manage our own cash flows.  A lot of people in their earlier comments have mentioned on how you can manage these situations…so I’ll just re-emphaize that have your contracts fleshed out very well.  Rahul Dev’s guidance on the same should be helpful. It’ll always be a balancing act between getting marquee clients who dont pay on time vs. getting small clients who actually pay you on time.

    On a related note, here’s an excerpt from an article I was reading about Amazon, and how it manages it’s cash flow. “Amazon’s entire business has been financed by vendors and customers: book-sellers who collect their invoices slowly; consumers who stump up money for Amazon Prime in advance of receiving deliveries; or companies that pay in advance for guaranteed capacity on AWS. In Los Angeles customers who pay $220 up front for Amazon Fresh, the company’s home delivery grocery service, get ‘free’ shipping on orders above $35. It might be ‘free’ but Amazon has their cash.” Source

    Regards, Vikram

  37. Hi Vikram. Its really good things you’ve shared. Every business has different performance metrics and as you said that doesn’t mean one can behave poorly. I think, clear communication and prompt reply helps a lot, if other party is willing to behave professionally. Yes, Rahul Dev’s guidance is very helpful. Thanks for your valuable input.

  38. Nilesh,

    I have been in Retail and have come across the biggest names in the industry who never bother to pay even after they have sold your goods. even the most ethical business groups behave like this. and yes, i am not a bit shameful in revealing their names. you can happily include Tatas, Ambani’s, Biyanis, Spencers, Birlas, DLFs. all of them want goods to be sold on consignment and once the goods are sold, they dont even bother to pay for the sold goods. 

    request you to reveal the As & Bs so that others can be careful while dealing with them.

  39. Nilesh, thats the story everywhere in INDIA. most of the person here think that website development just cost them very few bucks, how that can be so costly, when you ask them for payment.

    On the other note, they also want best thing and they start comparing as they want to be top most rated co, ofcourse with minimal efforts and pay. I have client he says to hire a IT employee how much money you need around 5-10k max then why ecommerce customised solution cost so much. As they are not able to weigh the product or touch the product, they think thats just a piece of cake.

    I have IT co. in ahmedabad. we deal in mobile application, for them mobile application means games. We have stopped taking local project, due to delays and regular changes in development. for small co. like us cash flow is very much important. I agree with you its better to consider is bad debt rather than running around them for payment all the time. Yes we do get signed by clients so possible chances to get paid somewhere in near future. though I have a question will that matters? as there are already many fraud or similar cases pending in court waiting to get hearing.

  40. Not a new story in India. While I have been on the other end of unprofessional treatment from software services company, I do understand your pain. I run a business in Media/Bollywood and bad debts is the biggest risk in our business. Couple things you can opt for

     – Start using an escrow service like odesk or elance or some other third party

    – Take bank guarantee against the payment installments. Much like a LC

    – Work in extremely small sprints and make the installment size smaller. For e.g. bi weekly delivery and payments. If there is default on any one payment, stop work immediately till it is paid and then restart. This way the risk of bad debts will be in a smaller quantum.  

    I would seriously recommend to take some legal action. Else they, and many like them will be more encouraged to take people for a ride. And as most rodinhooders here are asking for, open up the name. If the company did not hesitate to rip you off you should not hesitate to malign his name. Audi and Goa?? ,,,, F*** such folks

  41. HI Jaykishan, you are absolutely right. I’ve been asked similar questions from many clients many like, why web development cost that much 😉 “they want best thing and they start comparing as they want to be top most rated co, ofcourse with minimal efforts and pay” .. true true true … 🙂

  42. HI Vivek, Good suggestions. Work in extremely small sprints and make the installment size smaller is best way to follow .. I Guess you are pretty much right here. 🙂

  43. As many of rodinhooders have asked to reveal the names of Company As and Bs, I am sharing some notes as updates.

    Alok has already sent polite note to other parties as soon as he read the story. I’m hoping that, other parties should not miss this chance to rectify. And I’m very thankful for Alok, Asha and other rodinhooders for their valuable suggestions and support.

    Company A hasn’t replied back yet. Seems they have other side of story to share, which they have not shared in last 1+ year. I would love to hear, but instead sharing their views clearly, they already chose another route – “to give false promises and then complete ignorance to the matter”.

    Company B has replied with a positive note, but still its similar reply I am repeatedly hearing from them.

    I’ll do follow-up and will see ye mamla kaha tak jata hai 🙂

    And as I mentioned in the post, I’ve email communication as a proof of their repeated false promises; so I won’t mind revealing their name unless I see their willingness to make things right.

  44. Nilesh, 

    Sad to read this. In fact this is the Kahaani in all businesses. My only advice is never be afraid to take action. No money is less for your time. Nobody in the world should be allowed to cheat / defraud and build their life at the cost of your own money. Cheats And Frauds Never make Big Companies. People with ethics and value make.

  45. Hi Anamika,

    I tell this to all and I will say again. Courts / Law might be a difficult / complex solution but never be afraid or shy away from taking action. If it’s difficult for you it’s difficult for them. I know these are easy things to say and difficult to adapt but next time try sending a notice and see the reaction. And never shy away from taking it full throttle.

  46. Hi Nilesh,

    I am serial entrepreneur based out of Hyderabad, right now steering 2 ventures eSupport & GBB . I have faced similar situations in life & still continue to face , but could manage to win/fail .

    Feel free to call me on 9849004358 as I could share few tips, may be it could be of some help to you.

     

  47. Hi Sarthak … True … ethics and values are more important than any other thing.

  48. Hi Subbaram .. Sure, I’ll be in touch. Just sent you linkedin request to connect. Please accept. Thanks.

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