MindTree nurtures dream of billion dollar club

Much before the Q1 results were announced, MindTree’s CEO Krishnakumar Natarajan was positive about the company's capability to become a part of the billion dollar club when he said: “We are in the process of growing stronger in the way we do business. So right now, we do not want to speed up the process to reach the billion dollar mark. But we are seriously working towards it and within a reasonable period, we will achieve our target.”

That was pretty convincing, especially after the company had a ‘happening’ FY 2011. The resignation of Ashok Soota, election of Dr Albert Hieronimus as the new chairman and scrapping the smartphone idea which hampered MindTree’s growth plans and brought the company to limelight at short intervals.

All this, after the company had earned a revenue of $100 million in the sixth year of its operations.

But things were different then. According to Natarajan, “the first 20 years of Indian IT industry, by and large was driven by a labour cost arbitrage model, where you can ensure high quality, reduced cost, you have a reasonable charge of the growing business and that’s how the business grows.”

After the internal turmoil within the management was sorted out, the company looked back and gave a serious thought to its business plan. MindTree studied behavioural pattern among customers.

First being the increase in discretionary spending. Customers across verticals are now evaluative in what investments they make and they are looking for better returns on investments.

Not only that, the time frame in which customers look for return on investments is also sharpening, as they expect a return on IT investments within 12 to 15 months.

The second pattern is the demand for more specialization. Cost arbitrage, undoubtedly holds importance but the clients are scrutinizing their vendors’ understanding about their business. They expect vendors to transform their business.

Realizing that it has to gain an in-depth understanding about the domain in which its clients are operating, MindTree looked at underserved verticals. Within the manufacturing vertical (an early focus area for the company) they considered catering to the consumer products and automobiles area.

The company worked on micro verticals. Structured investments were made with consumer products particularly in digital marketing as it was felt that taking brands from traditional offline mode to digital marketing was popular.

MindTree not only lived with its odd times. Rather it corrected itself. That was evident in the Q2 results.

After overcoming unfavourable situations, MindTree seems to be back on track. It has bagged numerous deals. The significant ones being from a global player in the payments industry (for BI and Analytics), broadcasting company (testing services for multiple platforms), an Interactive Entertainment Software Company (for re-architecting and building platforms for new customer support applications) and a multi-million dollar deal from a European-based telecom company.