Mindtree is likely to post healthy margins in next quarter: Dayapatra Nevatia, ED & COO
At Mindtree, we pride ourselves as a digitally born company. Last time, when we refreshed our strategy, we created four service lines and we focused a lot on cloud, data and consumer experience related capabilities," Dayapatra Nevatia, ED and COO at Mindtree, says
Dayapatra Nevatia, Executive Director and Chief Operating Officer (COO), Mindtree, talks about dollar revenue, margins, vertical-wise growth and geography wise revenue growth among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: Your $revenue grew by 12.5% QoQ and 34.1% YoY, which is the highest revenue growth in a decade. What led to this kind of growth and what is your outlook on it?
A: At Mindtree, we pride ourselves as a digitally born company. Last time, when we refreshed our strategy, we created four service lines and we focused a lot on cloud, data and consumer experience related capabilities. So, the restructuring we did at the business, plus last year we focused a lot on strengthening our partner ecosystem, like hyper scalers, GCP, sales force, and have made strong relations with a lot of our partners. So, strategy coupled with partner relationships and the internal capability building has helped us to capitalise on the opportunity that we had and this is visible in our results.
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Q: The majority of IT companies are reporting a fall in margin this quarter due to wage hikes/rise in subcontracting costs. However, your margin has increased by 40 basis points to 18.1%. What is the reason and what is the different thing that you did then the others?
A: If you will ask specifically that how we have been able to maintain it then there are two to three reasons for it and they are we are focusing a lot on our engagement model with the clients and we are focusing a lot on output and outcome-based engagement models. If you will have a look at our results then our fixed price has gone up in the last two to three quarters. On the other hand, operational efficiency that was launched 5-6 quarters ago is providing good results and under it, we are hiring freshers more and our fresher intake is around four times compared to the last year as well as the year back to it, as well. Subcontractor optimization is available there and we are upskilling and reskilling the internal staff and are redeploying them in higher-end skills and at better price realisation. So, these are the reasons due to which our margins have been maintained and we expect that it will remain intact.
Q: On verticals, RCM showed 29.7% QoQ growth, while TTH showed 14.2% growth. How are you seeing these verticals going ahead and are this a sustainable number or it can improve further?
A: The main two reasons are there has been a good increase in personal and leisure travel while business travel will take some time. Secondly, we have diversified ourselves in this sector and we are now focusing on areas like food & beverage, cruise line and surface transportation. We are also building our capability in that area and have got some deals in this area. So, the recovery in the personal leisure travel and due to the diversification - in Travel, Transport, and Hospitality (TTH), specifically - has helped us to take our revenue in this quarter to the pre-pandemic levels. going forward, growth will be maintained in it and this is our expectation but yet we are not out from the COVID and a lot of headwinds are there. Hopefully, there will not such a headwind that can impact the sector severely and the growth that we have seen in the last few quarters should be maintained.
Q: Geography-wise, the UK and Ireland had an impressive growth of 60.5% on a quarter-on-quarter basis while North America has contributed more than 75% to your revenue which grew by 7.1%. What led to this growth in the UK and Ireland and going forward what is your outlook and how the North American markets are expected to perform?
A: I would like to talk about two things including that a few quarters back I had said that we have started investing a lot in Europe, the UK and the rest of APAC and Middle East areas among others. So, the results of that investment are visible now and this is why the UK & Ireland (UKI) and Europe have provided such strong growth to us.
This doesn't mean that the North American growth is not growing but growth in North America is also quite healthy and in the last quarter the quarter-on-quarter growth stands at more than 7%. So, it is difficult to maintain the percentage exactly in every quarter but if seen in the mid to long term than it is maintained in all the geographies maybe you have a look at the North Americal or Europe and the UK and Ireland.
Specifically, the growth you saw in the UKI in the last quarter. If you have a look at RCM vertical then primarily, earlier, we had a focus on the CPG sector while we worked a bit in retail and manufacturing but now in the last two to three quarters, we have focused a lot on retail due to which we have been able to add few more clients.
Out of these clients, a good growth has been seen at the end of one client and we are leading their digital transformation and are transforming their omnichannel, which is a big deal and due to which there had been a good growth at the end of that client. This client is likely to cross a 20 million this year and this led to good growth in this quarter in the UKI.
04:59 PM IST