The key to survival is to realign business with fundamentals, The Financial Express, Oct 18 2001.

FOR Mr Jerry Rao, chairman MphasiS-BFL Ltd and winner of the coveted Ernst & Young Entrepreneur of the Year Award 2001 in the ICE category, its been a journey worth every bit of the effort. Moreover, according to the recent Forrester Research report on offshore services providers, MphasiS has been listed as one of the emerging pivotal providers of offshore services and integration capabilities. MphasiS's new working models/methodologies—especially the ‘virtual operations' model and its concept of bi-polarity—are expected to strengthen operations significantly. Incidentally, the company has also taken a decision to move out of the products space and become a complete solutions and services focused player. In an interview with Kavitha Vivek, Mr Rao outlines his plans for the company. Excerpts:

What is the gameplan to face up to the challenges of the ongoing market recession. Could you outline some of the strategies?

The key to survival clearly is to re-align business in a manner that binds the fundamentals together. MphasiS is therefore looking at two levels—strategic and domain. On a strategic level we want to be a key player in the software solutions and services space. We have therefore taken the decision to axe our products business completely.

The thrust is on being a best of breed solutions integrator. As for the domain we will play mainly in the applications space (solutions for logistics and financial services) and in the systems business in a small way. Though the systems business accounts only for 10 per cent of our overall revenues, we consider this a strategic business.

So we will hold onto it. MphasiS BPO, the call centre and business process outsourcing subsidiary is also another thrust business that has seen significant growth. We plan to grow this business within the same domain areas of logistics, finance and retail.

Can you elaborate on your moving out of the products space?

We took the decision to move out of the products space because there is a conflict of interest when it comes to choosing between your product and another. When we say we are the best of breed integrators, we need to truly be just that. MphasiS had a few of its own products, mainly a healthcare product and a ‘Net Mall' product. We shut down ‘Net Mall' last year and the Europe-focused healthcare product business this quarter. This led to the restructuring of our European operations. However, let me mention that we will continue to be a player in the healthcare services space in Europe and Asia which are both growing markets for us.

Can you comment on some of the operating models that you have in place?

Total globality has been one key driver that helped MphasiS chalk out its working model. The management team brings together top talent drawn from different nationalities including Dutch, Singaporean, Taiwanese, Swiss, British, Americans and of course Indians. So literally the company can draw from the global experience these people bring with them. We have also put in place a ‘virtual' model for our development methodology. So this is not the traditional offshore-onsite model. In this scenario both the hardware and software reside at the clients side, while the work progresses remotely from anywhere in India or US. So this model often results in better customer satisfaction and better revenue margins for the company. Another key model is the concept of ‘Bi-Polarity', whereby both the US and Indian operations are key centres. So the question of one being the headquarters and the other a mere operations centre does not arise.

What has been the impact of the dotcom bust on the company, especially since you were doing a number of projects in e-business and e-commerce area?

The exposure to B2C work has certainly come down. However B2B enablement for legacy organisations continues to be a good business to be in. Interestingly, we avoided following the ‘Impact Pricing' model wherein stock is offered for the project in place of cash while working with start-ups. We insisted on cash for all projects, which was a good thing.