Monday, 19 January 2009

MindTree aims to make a mark in the UK

(By Anthony Miller). I recently had the pleasure of catching up with Vinu Varghese, Regional Business Development head of MindTree, one of the mid-size Indian players trying to make a mark in the UK. MindTree was founded in 1999 by a team of executives from some of the big Indian players though is much smaller than its better known peers. Calendar 2008 revenues reached just over $250m worldwide, of which some 20% came from Europe, mostly the UK.

I met MindTree CEO, Krishnakumar Natarajan (“KK”) 2 or 3 years ago on one of my trips to Bangalore and was impressed with the company. They recently acquired another Indian mid-size player I had also met in India, AztecSoft, which specialises in development services to the packaged software industry. MindTree also has a strong suit in embedded software development as well as offering more traditional commercial application development and management services.

I think that mid-size Indian firms like MindTree could appeal to top-tier UK businesses looking for an offshore partner for their smaller projects. Pricing is likely to be keener and this will help keep other larger suppliers in the mix in check. Mid-size UK businesses may also prefer dealing with a supplier nearer their own size. Of course, smaller players are usually more vulnerable in a downturn, tending to have a higher dependence on key customers. Nearly 40% of MindTree’s revenues derive from its 10 largest clients, vs around 26-27% with TCS and Infosys, but this is on a decreasing trend. Having said that, MindTree’s larger peers had a similar level of customer revenue concentration back in mid-2003 – and just look at them now!

It’s hard to see MindTree causing major waves in the UK market just yet, though they already have some well known brands in their client list such as Unilever, Imperial Tobacco and Volvo. I do suspect we will be hearing more of them in the future (though hopefully not as a potential buyer/merger partner for Satyam, as was ridiculously rumoured - and vehemently denied - just after the scandal broke).

By the way, MindTree wins a prize for one of the more pretentious job titles I have seen for some time. Co-founder and prior COO, Subroto Bagchi, is now listed on the executive team as “Gardener” on account of the fact that he “works at the grassroots by making himself available to (MindTree’s) 45 Communities of Practice that foster organizational learning, innovation and volunteerism within the organization.” With some considerable difficulty I will resist the temptation to say more.

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