When, in 2001, Sweden’s Volvo went looking for an offshore IT services partner to help build and maintain a new global dealer management system for its truck division, it did not turn to Wipro, Infosys, Tata or any of the other giants of Indian IT. Instead, it entrusted the mission-critical system, that would eventually be rolled out to 18-countries, to a little-known, but well-respected start-up made up of just 350 people at the time.
MindTree Consulting, which now counts Burger King, ING Bank, insurance giant AIG and Avis Budget Car Rental, Unilever and Alcatel alongside Volvo among its key customers, today boasts a headcount of over 4,000 and annual revenues of around $140 million, could be viewed as part of a second-generation of Indian outsourcers who are bringing some fresh thinking and greater intimacy to the processes of global IT service delivery.
Ashok Soota, one time vice chairman and president of Wipro, who founded MindTree in August 1999 along with a group of seasoned industry professionals mostly from Cambridge Technology Partners and Lucent Technologies, positions the company as “the best mid-sized” player. “MindTree provides personalised services to clients which a large IT firm many not be able to do,” he says. “We have a lot of customers today who would prefer to not necessarily work with an entity which has 60,000 or 70,000 people, but somebody who can be closer to the customer.”
It is very much a custom approach. “For every client, MindTree builds a unified team of both software engineers and business consultants that collaborate from start to finish on all stages of a project,” says Soota. That translates into “agility, access, attention and an attitude to our customers from our teams that is a key differentiator.”
Bangalore-based MindTree may be less than a tenth the size of some of its big rivals, but tries to match – and surpass – their capabilities through focus. It centres on bespoke application development and application management, related strategic IT consulting, data warehousing and business intelligence, over a handful of verticals – banking, financial services and insurance, consumer packaged goods, automotive and travel and transportation. Those activities generate three quarters of the company’s revenues, either through customer deals or via contracts with other IT services companies, such as Holland’s Getronics, who have less ability to leverage the India-centric global delivery model directly.
There is another side to the business: about a quarter of its revenues come from R&D services, where it undertakes work for companies such as chip designer ARM and storage systems maker LSI Logic.
As with others of its size, there are some risk factors. MindTree is reliant on a small number of clients; its top five customers account for around a third of revenues. Its future success will also depend on keeping pace with rapid changes in technology and developing new services to meet clients’ needs.
As a relatively small company, it may not be able to compete for the largest outsourcing contracts, but MindTree knows it can win over clients for its boutique services by ensuring it has the right calibre of people. As a critical measure of that, it was recently ranked second in the annual ‘Best Companies to work for in India’ survey conducted by Business Today, Mercer & TNS. That is reflected in its relatively low staff attrition rate of 12% and the fact that the average employee has 4.6 years of experience. An initial public offering on the Indian stock market, due to be completed in February, will not only raise money but, all importantly, increase its visibility among prospective employees and customers.