Our direct business may touch 60% in next 4 quarters: Ganesh Ayyar

Q&A with MphasiS CEO

Ganesh Ayyar, CEO of midsized IT services company MphasiS does not want to comment on HP’s proposed plans to sell its stake in the Bangalore-based company. He also does not want to relate MphasiS effort to grow its direct business with any possible exit of HP from the company. In an interview with Bibhu Ranjan Mishra he says the company will continue to grow both its direct channel as well as the business coming through HP sales channel. Excerpts:

Recently a senior HP executive said in a press interview that the company is looking at a possible exit from MphasiS. Have they already started the process?

They were discussing about their own business. It has nothing to do with us.

But they said this in context of MphasiS; they said ownership structure at MphasiS could change in next couple of years?

I have no comments on that. I am not definitely getting into that discussion.

Do such talks not distract management attention?

There will always be some (distraction). But so far we have kept our focus on what we are supposed to do.  

The share of MphasiS direct business as compared to the business it gets from HP is constantly on the rise. By doing that, is MphasiS preparing itself to face a situation after the possible exit of HP?

No. In fact, our focus on growing the direct business started almost 10 quarters ago. At the end of 2010, almost 72% of our business was coming from HP. As a company when we did the enterprise risk management model, we found that our entire growth was coming from HP. So we decided to have a strategy to grow our direct business. You can see the results today.

Are you saying when you joined MphasiS in 2009, it did not have its own sales engine?

Yes, absolutely. In 2009, we grew 43%. Literally, the entire growth came from EDS-HP channel. Before EDS’ acquisition, it had the sales engine. Once EDS came, the opportunities were humongous; so the entire sales engine partnered with EDS to go and sale. It basically became a sub-contractor to EDS. This is the trigger behind us taking concentrated efforts to grow our direct sales and also focus on more value creation by creating hyper-specialisation in verticals like banking, capital market and insurance.

When you came to MphasiS from HP in 2009, did you join the company with certain mandates like these?

Absolutely not. My joining of MphasiS as the CEO was an independent decision which was made by the company. I was chosen by the board of MphasiS. I went through eight rounds of interviews before I got selected. To answer your question directly, I was not planted at MphasiS by HP.

Would you like to completely reduce your dependence on HP for business?

That is not my desired position. I would also like to see HP business growing. But if you look at the last 10 quarters, it has been declining in every quarter. The way the direct channel is growing, I can’t rule out it reaching about 60% of our overall business in the next four quarters. I believe in the next 2-3 quarters, there would be decline in our HP business.

You did one acquisition last quarter; are you looking at more?

Right now, we have $430 odd million of cash in our balance sheet. We are open to acquisitions, but we won’t do large acquisitions like Digital Risk we did last year. We would instead look at smaller acquisitions in the range of $30-50 million. It would be to accelerate the pace of our growth in areas like banking and capital market, advanced analytics and mobility.