Order book already 10% higher than H1 last year, says Mindtree CEO & MD

We are very confident that the growth momentum will continue, said CEO Chatterjee

With Mindtree’s September quarter profit beating Street estimates, the company is confident the deal pipeline and strong order book will help it continue the growth momentum into the second half of financial year 2020-21 (FY21). In an interview, the company’s MD and CEO Debashis Chatterjee tells Sai Ishwar that the firm has already overcome “significant” impact of the pandemic. Edited excerpts:

Q. Are you back to pre-Covid levels in terms of profit and revenue?

A. Every business is different. We had to rework our strategies and make sure that we have a recovery plan as half of our revenue in the travel, tourism and hospitality (TTH) business got wiped out due to Covid-19. It is difficult to predict, but I would say a significant portion of the pandemic is behind us.

Q. Q3 is seen as a seasonally weak quarter due to furloughs. What is Mindtree expecting?

A. We know Q3 is seasonally weak. However, the way we have built the pipeline and the kind of deals that we have closed, we are very confident that the growth momentum will continue.

Q. Could you tell us how the deal pipeline is shaping up?

A. Deal size is relative for every organisation. But the pipeline has been very strong. It is led by digital transformation types of deals. We came up with a 4x4x4 strategy in terms of verticals, geographies and service lines. Our order book is very robust. What excites me is that most of the deals are like a long-term annuity or multi-year deals. The order book was around $694 million in H1FY21, which is almost 10 per cent higher than what was hit in the first six months last year.

Q. How do you see the cloud and digital transformation deals?

A. We have organised ourselves to cater to four service lines. Our view is that the pandemic has accelerated some journeys to these service lines, especially the cloud, customer sensors and data. And our reading is that this will continue, because once you have changed infrastructure and apps, you will develop more capabilities at the front end. It is definitely permanent.

Q. You saved Rs 128 crore on other expenses. Can you throw some light on this?

A. We put in place a process. A year back, we identified a team to look at operational efficiencies. For example, we had significant subcontract cost in the system (which we are trying to reduce). The second aspect is that travel did not happen and a lot of events got cancelled because of the pandemic. I’m confident of sustaining a margin of 19.6 per cent over the next several quarters.

Q. Some brokerage reports say there is a merger pending with L&T Infotech. Your view:

A. I would say at this point, there is nothing on the cards. We are doing fairly well as a separate entity.

Q. Can you tell us why there was a fall in overall headcount?

A. We should not read too much into the numbers. We have been focused on cross-training and upgrading our people. We also have been realigning ourselves with respect to this 4x4x4 strategy which is significantly digital and cloud-oriented. What you see is a reflection of those things, because utilisation has also jumped over the last two quarters.

Q. Your offshore presence is rising. So is that the reason behind this?

A. Multiple reasons. First of all, Covid-19 has changed the definition of business continuity planning. It was never defined as a process where 100 per cent of your people will be working from home. Also, our overall the dependence on H-1B visas is significantly low. So, we have to watch the situation, but we are not too worried because we do a lot of local hiring.

Q. Your active client base has reduced by around 60. Why?

A. We want to build strategic partnerships and relationships with clients and partners. Given that focus, it is important that we also rationalise the long tail (of clients) to a certain extent. But we are also adding new clients and new logos.