The co-founder also talked about what has changed since the company came into being some two decades ago and where it is headed
Mindtree, which was recently in the news for its promoters' trying to sell their stake in the company, will complete two decades of operations next year.
In an exclusive chat with Moneycontrol, co-founder Krishnakumar Natarajan talks about future growth drivers for the company, the nature of work with its large client, the changing nature of protectionism in large markets of operation and what the promoters think of the stake sale reports.
Q: How have things changed in the near twenty years since Mindtree's inception?
A: I think a lot of things have changed. In the early stages we took a conscious decision of trying to not position ourselves as another offshore services provider.
We were going in more for the project based business, we were not looking for traditional annuity type of revenue. But obviously that also has its limitations.
So after three-four years, we changed tracks to address a larger percentage of the enterprise while we retain our core capability of building large internet solutions.
Today, for any large enterprise, we are a very viable choice for partner.
A big part of the change to becoming an "adult" company is the implication on management style and team, which is far broader based in terms of leadership rather than just depending on a core group of founders.
When we began with what we called Internet solutions, many times it would be the client who would tell us what he wants, and we just implemented that request. Today, many times we are getting into (discussions with) customers where the problem itself is not very clear. Our consulting heritage helps us there and we are helping customers identify the right problem.
Q: Protectionism, especially in your largest market - the US - has often been called a cyclical phenomenon with new governments coming in. Would you agree with this?
A: We took a call on focusing on digital almost 4.5 years back. We saw that customers no longer wanted to wait for 8-10 months for solutions we built. They wanted things quicker and faster, so we said we have to be "locally local". This was even before President Trump got elected.
Our first local delivery centre, not for client requirement, which was in Gainesville in Florida, where without a customer we started building capability on agile technologies.
Today that has grown to about 400 local hires. Beyond Gainseville we started our cloud centre of excellence in Bellevue in Washington State, and a centre in Dallas.
In Europe and Munich we started our centre of innovation and our local delivery centre. But having said that, while US is a large market and there is a lot of noise around it, every country is sort of behaving in the same manner - whether it is UK, or Singapore, or Australia.
The only country which seems to be a little liberal now, is Canada.
At the end of the day politicians will do what is right for their vote bank and we need to build business models that are not dependent on that.
If you look at the H-1B visa applications over the last 4-5 years, we would not even be in the top 20. In fact this year we never even applied for any H-1(B).
We have built the local ecosystem, we've hired from 18 of 20 US universities over the last five years.
Q: Do you have local centres in all markets you operate in outside of India?
A: Right now we have local centres in the US, and in Europe and Munich. In APAC we don't have anything as of now.
Q: Will there be a change in how you operate in the Europe market, especially after Brexit?
A: Right now, we operated with UK being the base for our European operation, obviously we will have to watch how Brexit pans out and impacts us.
Q: Do you have de-risking plans considering there is a perception that you are dependent on your largest client for bulk of the revenue?
A: Yes there is a perception that our large client is quite big. Probably currently (it is) at a run rate of $200 million or so, or reaching that stage.
The way we see it is that the large client consists of different businesses. And each of them almost operates as a separate company.
The good part is we are present in many of their strategic businesses - cloud, internal IT, customer support. As we see it, we are really working with five independent companies within a large company. We are adequately de-risked in terms of our presence in a multitude of business in that one client.
We are focusing on how do we build the next set of customers - our number 2 to number 20 customers. How do we grow them ahead of the company growth is clearly a key initiative.
We are now being called to the table, we are getting called in a good number of renewal deals. A lot of them are now becoming potential top 20 customers.
Q: Mindtree did clarify in their earnings call that no promoter was selling their stake in the company. How do you deal with this internally? Why does this keep coming up time and again?
A: One of our promoters went to teach at a private university. Three of us are very active in the business, there is no intention of selling our stakes at all.
Some of this perception gets built because externally there is so much happening. While we, being a younger company, didn't have the tailwinds as our large competitors did, potentially in 20 years, there is a great opportunity that we will become the first billion dollar company.
It might happen in a year or one and a half year, but it’s a great opportunity.There will be stuff like this, reports will say some things. It is a distraction at that point in time but we have just learnt to take it in our stride and move on. Our goal is clear - we want to be a leader in five years.