Mindtree has formed an India business unit to tap in to the opportunity offered by the domestic market at a time when its major markets are in a state of uncertainty, said Rostow Ravanan, chief executive officer & managing director, Mindtree.
The mid-tier IT services company set up the business unit in April this year and will have an active focus on corporate India.
The company’s move is based on the strong revival of business in the Indian market over the last couple of years. In the initial phase the domestic business unit will focus on the private sector in India rather than the government segment.
“We have started a unit to focus on the India business as we are seeing a fair amount of revival in the India market. Our feeling is that we will stick to the private sector,” said Mr. Ravanan.
Through the establishment of the India specific unit, Mindtree expects to grow its India business to about $30-40 million within 3-4 years.
As per the latest forecast by analyst firm Gartner the IT spending in India is to reach $72.4 billion in 2017, up 6.9% from 2016 estimated spending of $67.7 billion. The key vertical segments driving IT spending growth include the communications, media and services, banking and securities, manufacturing and utilities markets.
Mindtree was not actively looking for contracts in the India market for last 2-3 years, but was working with a few Indian companies in a passive mode. Earlier the company had done major contracts especially in the government segment.
Aadhaar contract
In 2010 it had won the contract from the Unique Identification (UID) authority for the application development and maintenance services for ‘Aadhaar’. However, the contract was not a commercially successful business for the company.
When asked about the focus on Indian government contract Mr. Ravanan said, “Indian government is the largest IT spender in the country. However, with certain government regulations and longer sales cycle it would not be easy for us to participate in the government contracts as of now.”
The government in India is forecast to spend $7.8 billion on IT spending in 2017, an increase of 9.5% over 2016, according to Gartner.
The Bengaluru-based company has appointed Koushik Ramani as the head of the India unit. The company’s India unit will function based on a partner led model than individually setting up a strong sales channel to garner business.
“At this point of time we see enough opportunity in a partner led model where we will work with three major partners like Microsoft, SAP and Salesforce. Also, we may work with certain advisory firm to get business than setting a field force to increase our market penetration,” added Mr. Ravanan.
In the first phase of the domestic business unit rollout, Mindtree sees opportunity in the Banking Financial (BFS) sector and manufacturing.
“In India also we will focus on four verticals we cater to globally. However, the initial thrust will be given to BFS and manufacturing,” he said.
Mindtree is also looking at a different pricing strategy like a fixed price model or as service model offerings in India to grow the business.
Mindtree, which is witnessing a slower growth in the last couple of quarters due to client specific issues and poor performance of its acquired entity Bluefin and Magnet 360, said in the current year it expects a double digit growth in revenue due to good deal closure and strong pipeline.
During the last fiscal the company saw contract closures of $926 million which includes both new deals and renewals. Mindtree registered a 27% decline in its net profit for the fourth quarter ended March 31, 2017.
