MindTree Consulting plays the people card

From a modest beginning in mid-1999 as a small e-business company with just 14 people on its rolls, MindTree has evolved into a global software services and consulting company with 700 employees, and aims to feature on the list of the top 20 most-admired companies in the software services and consulting arena, says Abhinav Singh

MindTree will continue to concentrate on projects where the emphasis is on services rather than consulting, says n krishna kumar

With annual revenues of Rs 125 crore and 60 global customers spread across verticals, MindTree Consulting, which is co-headquartered in Bangalore and in New Jersey (USA), is ready to spread its wings. The company has established its presence in the United Kingdom, Japan and Singapore. MindTree aims to achieve revenues worth $231 million by 2007.

Milestones

One of the major milestones in the company's success story was the setting up of its development centres in New Jersey and Bangalore, by the end of 1999, less than six months after the company kick-started its operations in August. The next significant step was when it launched its Technology Business Unit in January 2000. This helped it extend its domain expertise in the technology space. With these developments, the company’s head count increased to 150 people by March 2000, from 14 in August 1999.

As part of its expansion plans, MindTree decided to establish its presence in other geographies as well, and in April 2001 it commenced operations in Singapore, Japan and the UK. Another important achievement came when its India development centre at Bangalore achieved the CMM-Level 3 certification.

Organisational structure

MindTree’s chairman and managing director Ashok Soota is based in Bangalore, and the American operations are looked after by Subroto Bagchi, chief operating officer and president for Enterprise Business in the Americas. The company has two main business units—the Enterprise Business unit and the Technology Business unit. The first is headed by N Krishna Kumar who is the president and CEO of the unit, while the latter is headed by its CEO and president S Janakiraman. Both these unit heads are based in Bangalore.

MindTree has a set of six corporate functions to support the two business units. These functions include people (HR), finance, quality, administration, information systems and culture and competence (training and development). The company is banking upon its unique human resource policies known as the ‘People Function’ to help it secure a place in the list of the top 20 most-admired companies in the software services and consulting arena.

The Enterprise Business unit specialises in verticals like healthcare, manufacturing, finance and hi-tech, and in horizontals of data warehousing, supply chain, enterprise application integration, Web services, application management (mainframe) and e-business.

The Technology Business unit is divided into two sub units—MindTree Incubated New Technologies (MINT) unit and the Project Execution & Engineering unit. MINT carries out IP generation and specialises in technology areas like Bluetooth, wireless LAN, 3G stacks and baseband controllers. The Project Execution & Engineering unit specialises in areas like semiconductors, consumer electronics, industrial automation, avionics and automotive along with communication (wired and wireless).

Targeted verticals

The company is strong in banking, financial services and insurance sectors (BFSI) as well as in manufacturing, hi-tech, travel and tourism sectors. These segments contribute nearly 65 percent of its revenues. The company has also recently forayed into the healthcare segment and hopes to achieve a substantial number of customer wins in this segment. MindTree has 60 global customers across these verticals including Fujitsu, Alcatel, Cisco, Sony, Hindustan Lever, Titan, ING Vysya, AVIS and Franklin Templeton. The company’s top 10 customers account for nearly 80 percent of its earnings pie.

Geographies

MindTree operates in five different geographies. Besides India, it has operations in the US, UK, Singapore and Japan. The US market accounts for the majority of MindTree’s revenues, followed by the UK. The company has a dedicated sales and marketing team in these countries. Besides New Jersey, MindTree also has an office in California in the US. Within India, it has sales offices in Delhi and Mumbai.

MindTree’s domain expertise in verticals and horizontals will help the company to foray deeper into the European and US markets, says t g c prasad

Challenges & strategies

One of the important challenges that the company faces is the increasing pressures on prices, due to global economic uncertainties. As Krishna Kumar says, "These days projects have shrunk in size and the time of completing a sales cycle has increased, which is one of the greatest challenges that our company faces." T G C Prasad, general manager, Global People Function (HR) at MindTree Consulting adds, "Apart from pricing pressures, it is the size factor and tough competition from other companies that also added to the challenges for the company."

MindTree plans to take the Mergers and Acquisitions path in the near future, and is looking forward to acquiring software service companies to increase its size and to leverage the acquired company’s customer base and core expertise. Krishna Kumar remarks, "We hope to make substantial gains due to our M&A and earn long-term profits. However, our M&A exercise would include only software service companies."

The company is also on a brand-building exercise as part of its current strategy to overcome challenges and stiff competition, particularly in foreign markets. As part of its brand-building initiative, the company is increasing its participation at industrial conferences to portray its strengths and win potential customers. The company has also stepped up its participation at analyst relation summits and is interacting closely with many analyst bodies. It is also concentrating on improving its telesales operations in the US to increase its customer base.

T G C Prasad says, "We don’t go on an advertising spree but bank upon customer references to gain customers. We also plan to go in for more mid-sized deals as we feel that this market is not deeply penetrated and hence we would be able to gain more business through them. We also aim to look for longer projects and will bank upon domain expertise in verticals and horizontals we are experienced in to foray deeper into the European as well as US markets."

Future focus

While M&A will remain one of the key focus areas in the near future for MindTree, the company will also concentrate on increasing its expertise in the storage and embedded technology segments. Krishna Kumar says, "Storage along with embedded technology are emerging areas and we plan to increase our expertise in
these segments." The company also intends to gain considerable mindshare in the still nascent healthcare segment, which has only a few competitors as of now.

However, the management claims that MindTree will not undertake any more geographical expansions in the near future. Says Krishna Kumar, "As part of our de-risking measure we established operations in the UK, ASEAN and the APAC region. Our current and future focus area however will be on expanding on our domain expertise to increase the bottomline and win more customers."

With regard to billing rates, Krishna Kumar agrees that there had been pricing pressure both on onsite and offsite projects, but it has stabilised during the last six to eight weeks and is expected to ease further in the near future. He says that MindTree will continue to concentrate on projects where the emphasis is on services rather than consulting. According to Kumar, at present only 8-9 percent of MindTree’s earnings are generated by consulting work, the rest comes from software services.