11 OCT, 2010, 06.25AM IST,
SHELLEY SINGH, ET BUREAU
None of the small to mid-tier technology services companies, operating for over a decade now has been able to get into the big league of TCS, Infosys and Wipro. The only exception, perhaps, is Cognizant, stealing a march over its rivals to get close to the top pack. MindTree held out a lot of promise when it began over a decade ago, but has just about managed to come out of the cluster of smaller companies. Cofounder and executive chairman of the $300-million MindTree Ashok Soota defends the company’s performance. He expects the company’s revenues to touch $1 billion in the next four years, outpacing industry growth.
Why hasn’t MindTree been successful in breaking into the big league?
“Not quite so. We had a flying start as a dotcom company. After the dotcom bust, it took us three-four years to redesign our operations and rework our strategies. When the market opened up between 2003 and 2008, we posted a compound average growth of 59%, while the big companies grew at 28% in the same period,” says Soota. Last year was relatively slow growth.
Why hasn’t MindTree been successful in breaking into the big league?
“Not quite so. We had a flying start as a dotcom company. After the dotcom bust, it took us three-four years to redesign our operations and rework our strategies. When the market opened up between 2003 and 2008, we posted a compound average growth of 59%, while the big companies grew at 28% in the same period,” says Soota. Last year was relatively slow growth.
“Yes, but now we are back. In our growth course, we have gone past two clusters — the group of small $100-million type of companies and the small-to-mid $200-million kind of companies. Now, you have the top four (TCS, Infosys, Wipro, Cognizant), then a few others including Patni and then us. We have moved away from the clusters and into a band.” Soota is optimistic about his company sustaining the growth momentum.
“We will grow faster than the industry. Nasscom has projected a 13-15% growth for the industry. My guess is, we will be scaling up the number and our guidance. In the next few years, the higher the overall growth of the industry, the more rapidly we will outpace the average. That is the next three-four year outlook. We will be $1 billion by 2014,’’ he says.
Over a dozen new segments — IT services and product engineering services, embedded technologies and R&D, software services that includes the cloud, analytics, software testing and infrastructure support — have aided growth. “The last is relatively new, but ready to take off. That’s the business where people give you their crown jewels. We have begun to get our first multi-year, multi-million dollar deals here,” says Soota.
The last engine or the seventh business is what MindTree calls ‘Next in Wireless’, the entity created after the company acquired Kyocera Wireless India in 2009.
MindTree has 2,300 out of its 9,000 employees in software test. Isn’t that susceptible to automation?
“As devices get linked to the interconnected world, thousands of types of test have to be done in a given software and hardware configuration. If there was no automation, all the manpower in the world wouldn’t have been able to do even the tenth of what we are doing now. The market will keep growing and the need for experienced hands won’t disappear.’’ The company won the applications development and maintenance services contract from the Unique Identification Authority of India (UIDAI).
Is India a big focus area?
“India is about 8.5% of our business. When we are $1 billion, we would like India business to be 12-14%. For that to happen, we have to grow the local business by 50% a year in the next few years. UID and few e-governance deals that we bagged have established our credentials.’’
How do you view the noises around visas, curbs on outsourcing, jobs problem in the US?
“Over the last 15 years whenever they (the US) tightened, the industry gained. The distinction this time is that the whole campaign is targeted at Indian players,’’ says Soota.
Will it impact business?
“None of this is going to slowdown business. But in principle, we are unhappy on these uncalled for and discriminatory moves by the US.’’
What about your own future plans?
“This is my third innings — about two decades of hands on engineering at Shriram Group, one-and-a-half decades at Wipro and now over a decade at Mind-Tree. I am enjoying this the most. I want to see the company through couple of big milestones — one is, the $1-billion target. Another, we would like to be among the 20 most-admired companies in our industry globally.’’
