Q&A: Ganesh Ayyar CEO & Sushanto Banerjee
Bibhu Ranjan Mishra / Mumbai March 09, 2009
the IT and business process outsourcing service provider, has seen
some changes in recent years. First, the Bangalore-based company
promoted by Jerry Rao was acquired by EDS. Then, HP acquired EDS
last year. Despite uncertainties in IT outsourcing, MphasiS, which
has now aligned its financial year with HP's accounting year (November
to October), has shown satisfactory results. Ganesh Ayyar, its new
CEO, and Sushanto Banerjee, CFO (interim), speak to Bibhu Ranjan
Mishra on the growth strategy. Excerpts:
How many MphasiS employees have been affected following
integration of EDS with HP?
Ganesh Ayyar: I can't comment. HP is a very important customer-cum-partner
for us and we get 45 per cent of our business from them. But we
work to earn it.
Your new customer addition in the January quarter is not
Ayyar: We added nine new customers in the quarter, which,
compared to previous quarters, is not much different. More important,
we had a revenue growth of 58 per cent in Q1. If we are able to
achieve this growth without getting more new customers, this means
we are building deeper relationships with existing ones.
Does it mean that none of your existing customers has left
Ayyar: Nothing which is material. If some customers have
shifted a little bit, that obviously takes place. They still see
MphasiS as a solid company and a long-term partner. However, if
they are under financial pressure whereby they are cutting discretionary
projects, that is their prerogative. It also means we have to figure
out creative ways to help the customer be successful and tide over
What kind of traction do you see from sectors that have
been affected due to the recession?
Ayyar: We are predominantly in three service lines —
BPO, Infrastructure and Apps. And all of them have grown. Some have
grown faster than the other. ITO has grown faster than the other
two, but the base is smaller. The growth has been reasonably good
and along the planned line of MphasiS.
Sushanto Banerjee: On the vertical side, we are seeing vendor consolidation
happening in the BFSI side. We are seeing tractions in verticals
like healthcare and telecom. In manufacturing, there are some ups
and downs. Automotive is down at present but other businesses are
seeing some traction.
But you had a drop in BPO business on sequential quarter
Banerjee: It was essentially because of two things. Our
revenues from some European clients was hit to a certain extent
because the rupee appreciated. The other reason is that we had a
few clients who reduced their business in this quarter. We knew
these clients were planning to ramp down. But that's always there
in the business.
You said you were seeing traction in the telecom space
— is it on the equipment or service providers’ side?
Banerjee: There is no growth but we are seeing some deals.
We are seeing some pipeline generating in the telecom side. It's
from both sides (equipment and services), but it's more in the services
Could you tell us how you are ensuring the financials stay
Banerjee: The situation is very competitive. So we need
to have a competitive cost structure to deliver market expectations.
We are trying to convert some of our fixed costs into variable,
so that we can pull the lever whenever it is required. And that
is something we will continue to do over the next few quarters,
till the market bounces back. We are also increasing our coverage
in terms of sales. That's an area where we will continue to invest
deeper, so that we can cover more geographies and more verticals.
Will the variable component in the salary be linked to
the performance of the employees as well?
Ayyar: Lot of things will be performance-linked —
that's true and that's how we exist. But that has nothing to do
with the salary base. Everyone in the industry is talking about
salary cuts now. At this point, we are not using that option. If
the situation really gets that bad, then we will revisit that decision.
Last quarter you added 574 freshers. What is your plan
(now) for freshers' recruitment?
Ayyar: We added 575 freshers this quarter. We have started
recruitment in this quarter again for freshers. That's an investment
we want to make for our future business. That's where our cost optmisation
comes in and that's where we can build a competitive cost structure.
There was some talk that many of Satyam's clients have
come to you.
Ayyar: I don't know how true this is.
There is also talk that many Satyam employees have joined
Ayyar: But how much of that has happened? It's more noise
than reality. We have a good customer base today and we, of course,
are going after new ones. But our first focus is to delight our
existing customers; retain them and grow our business with them
in this current economic environment. Of course, we are going after
other businesses. In that context, if Satyam customers are looking
for some other service providers, we don't have any problem.