Growth plan pays off for MphasiS
Oct 22, 2008,
Hindu Business Line
Bangalore, Oct. 21 Internal restructuring including management changes, cost optimisation initiatives and investment in technology has enabled MphasiS Ltd to significantly grow its revenue in the last two quarters, compared with the previous quarters where the growth rate was much slower.

The company saw a sequential revenue growth of 12.6 per cent in the second quarter. In the first quarter too, revenue had grown 12.9 per cent sequentially. In the previous two quarters, revenue had grown 4 per cent and 5.1 per cent quarter-on-quarter respectively. The increase is a result of a few clear decisions the company took.

“In first quarter, we took some hard decisions on what needs to happen, on getting the alignment, driving the focus and integrating them into action,” said Mr Jeya Kumar. One of the steps was to reorganise the executive team. In the past six months, the company has had new heads for most of its business divisions such as Applications, ITO, BPO, Sales, Technology and IP development, Quality and Business Operations.

The company has also increased its focus on how it could sell more to its customers. MphasiS is also investing in new growth regions, specifically in APAC, India and Europe. The company is working with HP to in crease its coverage.

Mr Kumar said the company would maintain its hiring guidance of 6,000 to 8,000 people for the year. Till date, it has added 5,000 people and by April, it would get the rest in place.

Mphasis has also done away with two layers of management, which has flattened the organisation, enhanced communication and access to the executive team, and also reduced costs. It has also been aggressive on managing operational costs including consolidating real estate across India, streamlining its procure-to-pay function and increasing utilisation. “We have improved our utilisation ten percentage points over the last six months. Our internal utilisation is about 80 per cent now. We are going to operate that at plus/minus one per cent,” Mr Kumar said.

MphasiS has also focused on developing solutions and products that would minimise the marginal cost of delivery. It has rolled out an IP based service offering called eBPO and an electronic accounts payable product. In this quarter, it plans to launch a solution for the health care industry. In March-April next year, it would launch a product for remote and virtual desktop. These products are automated and require minimum human intervention, which reduces costs.

Mr Kumar said the company grew 2 per cent in the US and 3 per cent in the BFSI vertical. “It is completely different from the rest of the industry. We didn’t lose any customers in the BFSI and the customers we serve are still around,” said Mr Kumar. He said MphasiS does not give forward guidance, but the company is very confident that its growth story will continue.