Mindtree charts course of leadership change
Software services firm identifies a pool of 25 executives who could lead the company, expands sales team
Premium(Hemant Mishra/Mint)
Bangalore: Mindtree Ltd, a mid-sized software services firm, has identified a pool of 25 executives who in time could lead the company.
The founder-led company has also expanded its sales team as part of a strategic overhaul exercise undertaken with management consulting firm Bain and Co.
Bangalore-based Mindtree, which was set up by former Wipro Ltd executives in 1999, also aims to earn $1 billion in annual revenue in five years, now targeting newer contracts in the range of $25 million from customers. It ended 2012-13 with ₹ 2,361.8 crore in revenue (around $370 million at current exchange rates) and ₹ 338.9 crore in net profit.
Mindtree worked with global talent search firm Korn/Ferry International to identify a pool of about 120 executives, of which 25 have been shortlisted to be potentially groomed to take over from the present generation of leadership.
“There was a group of 25 we picked up, where they go through a far more structured intervention with Korn/Ferry, with individual coaches," Mindtree co-founder and chief executive Krishnakumar Natarajan said in an interview. “They’re given short-term projects which are different. For example, if there’s some opportunity for M&A, they’ll be part of the due diligence team."
“Yes, Tridip Saha, head of new logo sales for UK and Europe, is leaving to pursue other interests," a Mindtree spokeswoman said in an email.
To be sure, the company has also attracted some top talent recently from top companies such as International Business Machines Corp. (IBM) and Cognizant Technology Solutions Corp. While Erica Ryan joined Mindtree as a senior director in the US sales team from Cognizant, Stephanie Gulbransen also joined the US sales team as a director from IBM, among recent high-profile hires at the company.
In July, Mindtree moved to a different organizational structure as part of its new strategy defined by Bain, collapsing two key positions—CEO of IT business and CEO of the products and engineering business—and dividing the company into four key business segments that report directly to Natarajan.
As part of the new, leaner organizational structure, Mindtree has expanded its sales team and created a separate team headed by Americas head Scott Staples to focus on getting fresh business.
“They (Bain) suggested we have a dedicated organization that focuses on high-quality new logo acquisition—hunting and big deals," said Natarajan, who is also chairman of the $108-billion information technology industry’s lobby group Nasscom. “In these verticals, it’s important to get high-quality logos on a constant basis."
Natarajan said the company expected to maintain its current level of net margins of 14% in the near term. “We’ll hold on to that range."
After Mindtree was founded in 1999, the firm grew rapidly and became one of the most promising mid-cap IT firms.
Its revenue growth rates prompted former chairman and co-founder Ashok Soota in 2008 to set an ambitious sales target of $1 billion by 2014. Soota left the company in 2011 to start another IT services firm, Happiest Minds.
Soon after Soota set the target, Mindtree decided to venture into mobile handsets and acquired the research and development (R&D) centre of Kyocera Wireless. However, the plan backfired and, in 2010, the company decided to exit the business and focus solely on its bread-and-butter services business. Mindtree’s performance started to suffer in 2008 and revenue remained constant until 2010. A year later, the firm revised its deadline of achieving $1 billion in annual revenue.
Experts tracking the firm said Mindtree’s near-term goal of achieving $1 billion in sales could be tough to achieve through its current organic growth rates, despite the last two-three years being more stable for the company.
“I think Mindtree has made a strong recovery from where they were two-three years back after a misplaced acquisition," said Ankur Rudra of Ambit Capital. “But we feel that a mid-cap like Mindtree will find it difficult to scale up at the pace of some of the larger firms which are more diversified...the ($1 billion goal) will be a challenge organically."
“Mindtree hasn’t seen any decline in 15 quarters or so, so they look quite stable now," said Jimit Arora of outsourcing advisory Everest Group. “However, in the mid-cap space, firms that focus on a particular niche tend to do better."
"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!
