The Hindu Business Line : ‘Large firms now more open to mid-tier players’

Chennai, March 31 MindTree Consulting is tapping into select segments in the financial services sector and exploring opportunities in the domestic market, to weather any impact from the US slowdown as well as gain from growing IT opportunities in India.

Speaking to Business Line, Mr Krishnakumar Natarajan, President and CEO – IT Services, MindTree Consulting, said “There is huge growth potential for our business in India. We see tremendous opportunities especially in package implementation in the ERP space in rapidly growing sectors such as retail and real estate.”

Talking about the scenario in the US, he said, “It may take two to three quarters for complete clarity to emerge on the sub-prime crisis and the extent to which companies may have been affected. There might be a capping on the overall IT budget. But for us, no one has come back and said anything about a cut in budget as of now.”

Will a focus on the domestic market mean having to work with tighter margins? Mr Krishnakumar explained that the pricing headroom (in India) was narrowing now compared to other geographies. “The margins and deal-sizes are getting better”, he says.

When asked about large IT deals from the domestic telecom sector going to overseas players such as IBM, Mr Krishnakumar said “While the deals are won by companies with end-to-end capabilities, there is scope for mid-tier companies like us to do some value-add over current services”.

US still represents the biggest market for IT outsourcing and the challenge for mid-tier IT companies is particularly pronounced as they try hard to play catch up with top-tier players.

Elaborating on MindTree’s engagements in the US, Mr Krishnakumar said “Our clients in the BFSI segment are small and mid-sized banks in the US. Many of these are first time outsourcers. These are predominantly in the areas such as risk management, which is very important for these banks so that any future crisis is averted. We also cater to the more ‘under-catered’ segments such as manufacturing, travel & transportation and hitech”. He also said that verticals other than BFSI are not experiencing a slowdown.

When asked if mega deals (multi hundred million dollar deals) won by the big four players were cutting into the pie for mid-tier players, the CEO said this wasn’t necessarily a threat. “Large enterprises are increasingly becoming open to more players, even mid-tier ones. Even a large player cannot be an expert in all areas. In fact, many of the deals that we have won are where the top-tier players are already there”, he said.

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‘Large firms now more open to mid-tier players’