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‘We look for M&A opportunities to augment our capabilities in strategic areas’

MUMBAI :

Bengaluru-based IT services firm Mindtree Ltd, is confident of delivering double-digit revenue growth on the back of strong deal wins, healthy deal pipeline, and broad-based revenue growth. For the second quarter ended September, Mindtree posted annual revenue growth of 34.1% and organic sequential revenue growth of 12.1%, the highest for a quarter in a decade. It continues to build on its digital capabilities both organically and through targeted acquisitions. In an interview, Debashis Chatterjee, chief executive officer and managing director of Mindtree, talks about the company’s mergers and acquisitions (M&A) strategy, digital business, and deal pipeline. Edited excerpts:

 

How do you see the overall demand environment?

We remain bullish about the demand environment. Organizations across industry sectors are looking to become agile, innovative, and technology-driven enterprises. There is growing appetite and urgency to tap into digital and cloud technologies. The new normal has embedded technology even deeper into competitive strategies for improving customer experience, market relevance, and business resilience. Organizations are doubling down on modernizing legacy environments, scaling digital and cloud transformation programmes, and reimagining businesses around hyper-personalized experiences, while driving cost efficiencies. This is fuelling continuous innovation in business models, processes, operations, products and services.

The focus is no longer on merely optimizing costs. It has moved to maximizing revenue, operational excellence, and business resilience. Investments are being increasingly driven by long-term strategic goals instead of short-term responses to market cycles. There is a visible uptick in spend on emerging technologies and services. Our pipeline continues to be healthy and broad-based with a good mix of annuity and transformational deals.

Earlier this year, Mindtree acquired L&T’s NxT Digital Business. Are you open to more such acquisitions and, if so, in which areas?

We continue to look for M&A opportunities to complement or augment our capabilities in strategic focus areas. Our M&A efforts are targeted at companies that can help us further our digital vision for our clients. We will, of course, be selective in the type of companies we go after.

We are excited about the opportunities around artificial intelligence (AI), internet of things (IoT) and Industry 4.0 that we have been able to unlock with Mindtree NxT’s capabilities. Last quarter, the IoT capabilities of Mindtree NxT helped us win transformation deals at leading multinational manufacturers of consumer goods, industrial products, building materials, and automobiles in the US, Europe and Asia-Pacific. We leveraged our NxT capabilities to engage with a tier-1 insurance carrier on IoT-related product innovation, and provide product engineering services to the European arm of a large fintech company using a pod-based approach. We are also developing solutions around Mindtree NxT’s railroad offering.

Do you have a strategy to win billion-dollar mega deals?

We see a healthy mix of annuity and transformational deals across industry sectors. Our portfolio and pipeline consist of multi-year deals as well as milestone-based deals. In our case, the latter have often been the starting points of large, long-term engagements. The deal momentum is further aided by our aggressive focus on client-mining to tap into cross-sell and upsell opportunities. The number of deals resulting from proactive pitches is on the rise.

We view all deals in the larger context of an organization’s digital ambition and vision. For us, what is more important than the size of a deal is whether it affords us the opportunity to deliver compelling value and make a lasting impact on the customer’s business. More than just technology, digital transformation is about far-reaching business, operational and cultural constructs, which cannot be fully captured by parameters such as deal sizes and tenures.

What are some of the futuristic technologies Mindtree is working on?

We are heavily invested in digital technologies, both evolving and emerging. Our born-digital heritage gives us a leg up. In addition to data and cloud, we are sharply focused on new-age capabilities in AI, IoT and industry 4.0, as underscored by the “edge-to-experience” proposition of our NxT service line, which is leading to growing client interest. We recently launched industry-specific IoT solutions built on ServiceNow Connected Operations, which will help manufacturing and consumer goods enterprises to turn data from their IoT infrastructure into actionable business workflows.

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