Pallak Seth, founder of PDS Limited, is redefining the global sourcing landscape with innovative strategies that challenge the longstanding dominance of major players like Li & Fung. By establishing a next-generation sourcing platform utilized by renowned brands such as Zara and Gap, Seth has positioned PDS as a formidable alternative in the industry.
Arriving in Hong Kong in 1999 with a modest investment of $250,000 from his father, Pallak Seth was determined to expand his family’s garment factory operations in India. His initial focus was sourcing new product categories from China to better serve clients brought in through his father’s connections. By building relationships with Chinese manufacturers, Seth diversified the product offerings available to European retailers, setting the stage for PDS’s successful trajectory.
In just six years, Seth partnered with Sunny Malhotra, his first hire. Together, they paved the way for PDS Limited and established their flagship subsidiary, Simple Approach. As Malhotra recalls, “That was the start of PDS’s journey. We were a $50 million dollar business back then; today, we’re a couple of billion.”
The early 2000s were dominated by sourcing intermediaries like Li & Fung, which operated a vast network built through aggressive acquisitions. While this model was lucrative at the time, it also created vulnerabilities in the face of the rapidly changing market dynamics. Seth recognized that the sourcing industry needed a fresh approach—one that wasn’t solely reliant on acquisition for growth.
He believed that the talented salespeople within sourcing companies lacked adequate financial incentives to drive business expansion. By addressing this gap, Seth restructured PDS to provide sales executives significant equity stakes, transforming them from traditional employees into empowered entrepreneurs. This strategy has not only attracted top talent but has also fostered a culture of ownership and accountability within PDS.
Currently, PDS operates with around 50 subsidiary entrepreneurs who manage their own profit and loss statements and maintain close customer relationships. This decentralized structure encourages independent decision-making, allowing each business to operate as if they own it fully. According to Malhotra, “As long as we’re meeting our budgets and financial targets, nobody gets involved.” This autonomy has proven to be a significant advantage, retaining talent and ensuring strong performance across the board.
With over 600 vendors in countries such as China, Cambodia, Pakistan, and Turkey, PDS is producing one million pieces of clothing daily. However, unlike the acquisition-heavy strategy of Li & Fung, which has seen its market value plummet by 95% over the past decade, PDS focuses on robust vendor relationships and quality management, ensuring compliance with environmental and social governance standards.
Seth’s approach to disrupting the traditional sourcing model is not limited to reshaping internal structures; it also includes leveraging technology. The rise of “digital-first” competitors has further changed the industry landscape. While Li & Fung has made strides in incorporating digital solutions, experts note that PDS has effectively marketed its offerings, which are rooted in digital transformation.
Moin Golam, who transitioned from Li & Fung to PDS, describes his experience: “In PDS, you are the one running the show.” His assertive move to join PDS reflects the growing appeal of entrepreneurial opportunities within the sourcing realm. Individuals like Golam are drawn to firms that prioritize not just profits, but the autonomy to drive their enterprises forward effectively.
Competing directly with PDS is BlueKaktus, an India-based SaaS sourcing platform founded in 2000. BlueKaktus optimizes supply chain processes, offering real-time tracking and reduced lead times. However, PDS distinguishes itself not only by providing exceptional service through subsidiary-led initiatives, but also by investing in emerging technologies.
PDS Ventures, established in 2018, enables PDS to co-invest with brands in innovative technologies, ensuring it stays ahead of trends and market demands. Noteworthy investments include the regenerative cotton tech platform Materra, among others.
Looking forward, Pallak Seth envisions expansion into new markets, including Central America for nearshoring to the US. His commitment to fostering a entrepreneurial spirit remains steadfast as he continually seeks individuals ready to break away from traditional industry norms.
“[There are almost] no hard assets at PDS,” Seth emphasizes. “The assets are the people and relationships.” Through innovative strategies and a focus on entrepreneurship, Pallak Seth is not just disrupting the sourcing industry; he is reshaping its future.
