Ganesh Ayyar, chief executive of Mphasis Ltd, is confident of the road ahead for the company after Blackstone Group LP on Monday agreed to buy a controlling stake in the Bengaluru-based information technology (IT) services provider. Edited excerpts from an interview:
With a new owner in Blackstone, what is the road ahead for Mphasis?
I feel like a kid in a toyshop, excited about the potential ahead of us. This is a game changer for us and I’m excited about the business potential and very confident about my team. We have grown over 14% in direct revenue and so my confidence comes from our track record.
Now that Mphasis has a new owner, is it fair to assume that the management team will be back to the drawing board to come up with a new strategy? What will be your focus in the coming 12 months?
From the strategy perspective, no. We have always been an inch wide and a mile deep. Specialization is the key and that has been our strategy and we will continue with it. It is not helpful if we change this and we don’t want to do a surgery that will leave the patient dead.
But from an execution perspective, the answer is yes. We will have to go back to the drawing board. We have to make more investments in sales and domain experts. We are very proud of the senior management team we have, and will focus on portfolio companies (of Blackstone), and once we have understood their requirements, we will make investments in sales people, bring in more domain experts.
Essentially, we have to bring value to these customers. Of course, deals will be awarded at arms distance but this is one way to approach and address this opportunity.
Again, in the short-term, say in the next fiscal year, your overall business will be hurt. This is because HP has assured at least $200 million work in a year, as against $230 million you got. So will it be fair to infer that in 2016-17, Mphasis will struggle to keep up with Nasscom’s growth guidance, irrespective of the steps you take to increase business from elsewhere?
I’ll say its too early to make that inference. Now, HP business over the last three years had been declining at the rate of 21%. But the HP revenue is the minimum assured revenue and this does not limit us from hunting for more. And we intend to hunt for more. It’s too early to say where we will go or the growth we will have. We are converting all this into an operational plan as we speak.
So say in fiscal year 2017-18, will Mphasis’s overall growth be industry leading?
I cannot give any forward-looking numbers. But what I can say is this. Our direct revenue (revenue outside of HP business) is already growing more than the Nasscom guidance. So I am more focused on specialization than size. The game is not scale but specialization. Because scale will lead to commoditization and that will be replaced by automation.
Hence, specialization is key to success and that is what we are building and will continue to focus on. In fact, in direct area, we will beat Nasscom estimates in fiscal 2016-17.
So what is this specialization and the areas of focus for Mphasis? How do you differentiate your firm compared with other mid-size IT firms?
We are focused on new generation services, and that includes digital. My definition of digital is where I see customers spending more money than before, and that includes governance, risk and compliance and digital and new generation automated infrastructure delivery services.
If I just look at governance, risk and compliance and digital, in fiscal year 2014-15, we had 34% of total revenue from this space.
Now in this year (ended March 2016), 53% of new wins are coming from this space. So we are very confident we should be able to beat competition, including large companies, when it comes to areas of governance, risk and compliance, and digital solutions (to banking clients).