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Automation will save costs and give better opportunities to people: Ravanan, Mindtree

Source | Economic   | ET Now

How was last financial year for Mindtree?

Rostow Ravanan: There is tremendous amount of excitement on multiple fronts. If you look at for example our people scores, very high satisfaction, multiyear lows on attrition, very high customer satisfaction, etc. But if you leave those kind of internal issues aside from our customer perspective, amongst the best pipelines ever seen in the history of Mindtree, great deal wins in Q3 and Q4. So even externally traction is very-very strong. Overall expect high growth rate for next year for Mindtree. When growth comes back in businesses like us, profitability should bounce back reasonably well. There are few operational challenges as well and the management team and We are completely focussed on solving those. We expect next year to be both exciting in terms of revenue growth and also profitability improvement.

A lot of macroeconomic trends from the US issue that is being talked about so much to the impending UK elections in June, the consequences of Brexit, you had also previously indicated some sort of choppiness in your large accounts. Overall how do you read the mix really at this point of time?

Rostow Ravanan: Confusing! that is the one way you can describe it. There is a lot of uncertainty in the world right now. Monday there is good news. Tuesday there is bad news both for our business and even in terms of global market performance as well. What we are doing is to prepare Mindtree to handle that volatility. I do not think we can wish away that volatility. It will be similar for the next foreseeable future. We are preparing ourselves from strategy point of view, rigorous execution. I am trying to insulate ourselves as much as we can which is probably useful up to a certain point like we declared in Q3 and Q4 but Q1 and Q2 were not great quarters for Mindtree, so I think to some extent we will obviously be impacted by global events but to the extent management teams can work on and insulate ourselves, we are doing the best that we can.

ET Now: What sort of local hiring ramp up will Mindtree have to do in the coming quarters?

Jagannathan Chakravarthi : Come to this immigration law, regulation changes, nothing has concretely been come out. We have to give our reaction to this little later. But adding to this local hire thing, we have been investing on local delivery centres for last four-five years. We are ahead of our competitors because we have two or three delivery centres and our global delivery centre in Florida is really ramped up in the last three years. This has actually helped us to come very close to that 50% level of locals with the 50% people from outside, so this has actually helped us to overcome all the challenges coming in. So I do not think we are going to have any special initiative to increase the local hire because of that increase in cost. No we are not getting into that direction. We will try to be locally local whichever market we are present at present and that is our strategy will continue to be focussed on brining people from the other geographies wherever is the requirement.

Rostow Ravanan: If you look at the US alone and for FY17, our local recruitment was almost 60% and the H-1 or L-1 transfer is from India was only about 40%. So our engine is in place for adding people based on customer needs, based on technology evolution, etc. But I also want to zoom out for a second. The events in the US typically get the maximum media attention simply because it is the largest economy and for some other reasons but similar trends are noticed in other parts of the world as well. We are preparing ourselves for tougher immigration scrutiny, more rigorous implementation of immigration laws, etc. Mindtree has always been extremely compliant with all the applicable regulations. We do not expect anything that we need to do as a reaction to some of these events whether it is talent development or compliance, our plans are already in place.

ET Now: But it is also in terms largest exposure to the IT companies here in India. Management commentary even yesterday on concall has been positive for the first half but give us a sense of Bluefin and Magnet 360, this saw some bit of a tepidness over the last few quarters, things are looking up right now, how do you seem them panning out and also in terms of margin levels that these both acquisitions will play out for Mindtree?

Jagannathan Chakravarthi : Yes, both Bluefin and Magnet for FY17 Magnet growth was very good. They have put in place strategy and process to improve the margins in the coming year. This is for Magnet 360. Coming to Bluefin had some tepid growth in financial year 2017. Growth from Bluefin is expected to be very strong and this is going to aid them come back to the black. So we are expecting both revenue growth and profitability and substantial improvement in both these acquired entities.

ET Now: Also with the larger focus on automation in terms of head count addition will it be lower this year compared to last year and also give us– I know you did mention that wage hikes will be effective July 1st, I presume, but what is the sense of wage hikes also will they be lower compared to last year because that is the sort of noises that we have been hearing from your peers also?

Jagannathan Chakravarthi : Increment, we have not yet decided. We are going to decide in this quarter one of this year so we will update you whenever the decision has been taken on that. Coming back to the automation I just wanted to change the outlook on automation. Automation actually increases the efficiency and it will save cost and improve the profitability not only for the organisation it will give more opportunities for people to come. We are not seeing this as a development which is going to reduce the headcount or having any negative view for the people. We are utilising automation as a tool to benefit for the company as well as for the people who are working along with us and our customers also. So this is a good technology which is going to help all of us in the coming days.


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