The Hindu Business Line : `Time to grow our revenue'

iGATE is growing older - and feeling better. Mohan Sekhar, Chief Delivery Officer, tells eWorld why, and also talks of the company's plans for the years ahead.

Mohan Sekhar

ASK him the usual, mundane question, "How are you?" and you'd get an unusual answer: "Good... and getting older."

It's easy to assume that being responsible for delivery of software is wearing Mohan Sekhar, Chief Delivery Officer, iGATE Global Solutions, down. But when you wade into those figures — SG&A, utilisation operational efficiency — and hear him dwell on how iGATE has changed and on his optimism for the future, it strikes you that the response could stem from the fact that he, under 45, , is someone who wants to do more, and do it quickly.

eWorld chatted him up a second time, the first being when he was less than a week old at iGATE.

Excerpts from the conversation:

What will be the key drivers for improvement in operating margins over the next year or so?

We have to build our topline. We have now reached a comfortable zone. In the first 18 months, we were focused on building the company's brand, putting in places the processes, building IP (intellectual property) and technology platform and recruiting people. Early on in the cycle, we did not go after topline growth.

In the last six months, we have been focusing on investment in sales and marketing. We will be focusing on topline growth in terms of adding more clients quarter on quarter. New business has started coming in at higher rates. Operational efficiency is up and we will continue to improve on this front. Delivery systems have been put in place and we will improve further. Wage bill is coming down as percentage of revenues. We expect the billing rates to go up, as seen in the recent wins we have had. SG&A (Selling, General and Administrative expenses) will come down.

On the recruitment front, we expect to add more freshers in the next one year; 60-70 per cent of iGATE's current employees are new employees. We are bringing down the average experience of employees at the company. We were at fiveyears before and this is coming down. Utilisation is at 70 per cent currently. I expect this to go up to about 75 per cent.

Since you were instrumental in handling the delivery side of the company's operations, what are the important changes put through in the past two years?

The offshore-onsite mix was 38:62 when I came on board in November 2003. Now it is 30:70. We have now reversed this completely. I would be comfortable with the 28-32 per cent offshore range over the next two years.

When you work onsite you get aligned to customer's place. There is less control over the employees. If iGATE had to take ownership of projects, we needed more people here offshore. We wanted to get rid of staffing work. We needed to shake up the organisation. We started implementing and executing these. These were fundamental changes in the way we worked. Old DNA has been completely erased.

How do you plan to execute your ramp-up plans?

Given our size, we will focus on Fortune 1000 clients and primarily on $5-10 million deals. Historically, one of the issues was that our Top 5 and Top 10 client portfolio was shaky. The old clients were not willing to offshore. A lot of those revenues had to be changed. We think that the Top 5-Top 10 clients will change over the next two years.

Second wave of offshorisation (by companies that had offshored say in early 2000 will start offshoring to India in a big way again) will benefit us. It will pick up steam. Recently we were signed on by a top North American Bank as a strategic partner, who was working with two of the top Tier 1 companies. Our iTOPS (integrated technology and operations) model aligned with client's business is the main reason for our winning business. We believe sharing risks with customers will work for us.

Smaller companies will have to innovate. We are doing things differently. We have come out with transaction pricing-risk sharing model. We are giving $10 millionaccounts the kind of attention they look for, which I believe the Tier 1 companies will not be able to provide. We first put frameworks in place, then customised it according to the client's requirements. Frameworks help us cut costs, increase productivity and improve quality. Our flexibility comes in the way we automate the process, plug and play and offer technology platforms.

Over the next few quarters, what can investors watch out for?

We have had two salary increases, still we have kept the margins up, believe that the iTOPS model is getting validated and we are building some predictability in the business. We need to build scale. Over the next 12 months, we will focus on increasing gross margins, improving efficiencies and further bettering our processes along with investment in IP.

maverick@thehindu.co.in

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