Mphasis is working “hard” to figure out the right strategy to arrest the declining business from US-based IT giant Hewlett-Packard, which is both its largest shareholder and the biggest customer. The contract between Mphasis and HP is due for renewal in February.
Revenue from HP for the Bengaluru-based IT company dropped to 27 per cent due to “client ramp down”; international clients contributed the balance 73 per cent. It was exactly the reverse four years ago, said Ganesh Ayyar, CEO and Executive Director, Mphasis, on the declining business from HP.
“Do I like the fact that HP business is declining? No. Is it a deliberate move on the part of Mphasis to make it decline? No. We have to find a solution to stop the bleed. We have not quite figured out how to crack the code. I have work to do in reviving the business from HP,” he told
For four-and-half years, Mphasis has been trying to improve the HP business with different value propositions, but has not succeeded. “I definitely have not given up. With HP being our largest customer, there is an opportunity for us to tap more business,” he said.
For HP, Mphasis provides services in infrastructure management and application development. Out of the total 27 per cent revenue, the direct revenue from HP is 8 per cent and the remaining 19 per cent is from the external clients of HP where Mphasis acts as a sub-contractor, said Aiyyar.
‘Not a victim’Mphasis, which reported a revenue of ₹1,557 crore in the September quarter, provides information technology service in areas such as infrastructure, applications outsourcing, and architecture guidance.
“Just because HP is a major shareholder, we should not expect them to do us a favour. They should be as strict and professional as any other customer would be. That’s what they are doing,” he said.
“We are not a victim of HP’s business decline. It is a reality that we are facing. They are not doing it to hurt Mphasis. They are doing it because they feel that is the right thing to do so. Our job is to figure out how to be in the path of relevance. They have the right to choose anybody,” he said.
“We hear investors like our story on direct international business. They like what we are delivering and they would like to see HP business stabilising. But the weightage of HP business on the company dropping gives them greater visibility about our future,” he said.
Ayyar said as part of a restructuring exercise carried out 18 months ago, out of the total 100 clients, the company has identified a group of 16 customers to “make substantial relationships” and invest more on them to ensure more revenue comes from these core clients.
These 16 clients need not be the top ten, but are the ones who would be spending more on technology, he said.