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MphasiS plans expansion in India
The Hindu Business Line, October 14, 2009

Vishwanath Kulkarni

Bangalore, Oct. 13

MphasiS Ltd, the India listed subsidiary of computer maker Hewlett Packard, plans to step up its focus in the domestic IT market where it is eyeing business from verticals such as healthcare, government, telecom and banking and financial services.

“We would like to grow our domestic business in India,” said Mr Ganesh Ayyar, Chief Executive Officer of MphasiS. “I believe that there are lot of services contracts in the Indian market, which truly reflect best global practices that could be exported,” he added.

MphasiS has a significant presence in the Indian BPO market, where it serves customers such as State Bank of India and Bharti Airtel among others.

“We do have a small presence in the applications market, which we would like to grow,” Mr Ayyar said, adding that the company would look at the partnerships to expand its presence in the country. “Partnering with HP is clearly an option, but HP does not work with only one partner. They have a choice,” he said.

To strengthen sales team

MphasiS plans to strengthen its sales team for the Indian market. “We will put greater emphasis on the sales target,” Mr Ayyar said. Currently, it earns less than a tenth of its total revenues from the Indian market.

“It is in the mid-to-high single digits,” Mr Ayyar said. The company earns about two-third of its revenues from the US, while Europe accounts for a fourth.

Commenting on the market, Mr Ayyar said though sentiments have improved, the IT budgets were unlikely to change. “Next year will be good compared to last year, but I don’t expect the entire IT budgets to be lifted significantly because people are cautious about increasing their cost structure. We may see continuation of the interest to offshore in 2010,” he added.

MphasiS earns about 70 per cent of its revenues from HP and its customers. “HP has been the fastest growing channel compared to the non-HP business,” Mr Ayyar said attributing the company’s success in the past three quarters to the parent company.

“We believe the recent renewal of master service agreement with HP now paves the way for larger offshoring opportunities for MphasiS.

The company is gaining traction from its joint go to marketing initiatives with HP and will also likely benefit from EDS’ Best Shore strategy for recent deal wins such as Telstra and Nissan,” said analysts at Bank of America Merrill Lynch in a recent note to clients.

MphasiS reported a 128 per cent rise in net profits to Rs 229 crore for the July quarter, while its revenues grew 42 per cent to Rs 1,105 crore.