Mumbai: MindTree Ltd is trimming capital spend for the year ending March and has deferred plans for a mid-sized hub in Mexico as the global slowdown bites, but the ousourcer was unlikely to cut jobs, a senior official said.
MindTree now plans to spend $10 million in the year to March 2009, down from an earlier target of $17 million to $18 million, chief financial officer Rostow Ravanan told Reuters on Tuesday.
The capex cut comes after MindTree cut its FY09 net profit forecast to $12.8 million-$14.5 million and revenue to $223 million to $225 million last month.
“Any discretionary capex is being cut down,” Ravanan said in a telephonic interview. “Only things which have near-term tangible benefits are being incurred right now.”
MindTree, which provides research and development and IT services, had announced a plan to set up a development centre in Mexico with 250 people.
It had earmarked $2 million to $2.5 million for the first phase of the project, which will not be spent now, Ravanan said.
“It was led by one large US-based customer, which wanted us to have a near-shore presence in Mexico,” he said. “The customer has now asked us to continue in India itself because India is obviously cheaper than Mexico.”
Recession in India’s key software markets and global turmoil in financial markets has hit the mid-tier tech companies hard as they reel under pricing cut demands from clients.
Despite the pressures, MindTree was unlikely to trim its 8,000 strong workforce but may cut salaries to tide over, he said. “It is not company policy to cut headcount. We will never cut headcount for business reasons,” he said.
MindTree resorted to salary cuts across the board instead of laying off people during the slowdown in 2001-02 and the same approach could be adopted now, he added.
MindTree had not seen any contract cancellations, Ravanan said, adding he expected to add up to 15-20 customers in the March quarter, almost in-line with the customer additions in the December quarter.
Ahead of the news, the shares were down 0.5% at Rs205.55 in a firm Mumbai market.