Mphasis, in which private equity firm Blackstone Group owns a majority stake, is planning to acquire small firms specialising in cloud and cognitive technologies for about $50 million apiece, said Nitish Rakesh, chief executive officer and director.
“The entire acquisition strategy is based on acquiring capability,” Mr. Rakesh said in an interview on Monday.
“We are looking at companies in cloud and cognitive [technologies]. Within the sub-segments of cloud and cognitive, we may need to strengthen our capability or accelerate it. The size will typically be a tuck-in.
“It is not a large company that we are looking at. We are looking at smaller, quick acquisitions that can give a quick capability in one area. It may be less than $50 million in the first two or three cases. Maybe one or two in the range of $100 million.”
“The clients of Blackstone are reflecting on our deal wins. About 70% of our revenues come from direct international business which comprises of core technologies, digital risk and product platforms.” The other direct business segments include HP DXC and Direct Others.
“But revenues are growing by 10% from a year ago. That will continue. Revenue growth and employee growth have diverged. Headcount growth will not be same as the revenue growth. The nature of work has changed as you are using more automation,” he said.
’Repurposing people’
“Our utilisation [of human resources] is pretty high since we were not growing earlier. So, we never had excess people. Now that we are growing, we need to repurpose the people that we need for the growth. We invest, maintain and retrain as three categories of competency. Then we measure their competency by the level.”
The company earns 70% of its revenue from the banking, financial services and insurance sectors. “Forty percent of the IT spend is on the banking sector,” and most of its is on the digital front,” he said.
Mphasis is “prepared for any eventuality”arising out of the uncertainty in the U.S. visa curbs, he added.
