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For Mphasis, move to digital is the tailwind that will drive its growth

Companies are bracing for drop in client spending at the back of global growth slowdown. Given the political uncertainty surrounding Brexit in UK and the US-China trade war, customers are cautious and are taking a wait and watch approach.

August 09, 2019 / 09:55 PM IST
 
 
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At a time when IT firms bracing for a slowdown and drop in client spending especially in banking space, Mphasis has been an outlier.

The company has seen broad-based growth across sectors with margin improvement. Nitin Rakesh, CEO, Mphasis, said the company is confident about the growth trajectory for FY20 as well.

Speaking to Moneycontrol, Rakesh said, “There are more headwinds in 2019 compared to 2018 in terms of macro-economic factors.”

Companies are bracing for a drop in client spending due to global growth slowdown. Given the political uncertainty surrounding Brexit in the UK and the US-China trade war, customers are cautious and taking a wait-and-watch approach.

The uncertainty itself could be an opportunity, according to Rakesh. At this juncture, Rakesh said, “If anything they (customers) will say, let's squeeze my core business because I don’t want to spend any money there. So that gives me an opportunity to accelerate my digital spend,” he pointed out.

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"We also don’t think enterprises will stop spending money on consuming tech in the way that it needs to be consumed. Because that’s an irreversible phenomenon.”

This includes banking and financial services that are seeing some softness in capital markets in the US and Europe. For most firms, the growth in the segment declined and these firms have expressed continued slowdown in the coming quarters as well in FY20.

Macro-economic climate apart, the way clients’ take business decisions have changed over the last few years. For instance, decision cycles to launch a new product have come down from 3-5 years to a few months now. Some of them have moved on-demand, where enterprises will on-board IT service-providers as and when needed.

This means that the way these enterprises consume technology and services will also change.

So IT firms should be quick to offer products and services that cater to these changing needs. That is why in the last two years Mphasis had shifted its focus and investing in deep technologies and this is paying off.

This has reflected in improved margins and growing digital portfolio for the company that now accounts for about 52 percent.

To cater to the growing demand, the company is now focusing on new-age technologies such as cloud computing, cognitive solutions and cyber risk.

“These are megatrends. The migration to newer technologies will continue and that is the tailwind for Mphasis and will future proof the business,” he added.
Swathi Moorthy
first published: Aug 9, 2019 09:07 pm

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