Mindtree expects offshoring to continue even after pandemic ends

Pune: Mindtree Ltd. expects offshoring to remain high even after the Covid-19 pandemic abates as clients have accepted the fact that employees are working remotely, the CEO has said.

“Our offshoring ratio was 83%, and I feel that this will remain high as people have realised that work from anywhere is the new normal,” said Debashis Chatterjee, chief executive officer at the mid-tier software services firm.

The Bengaluru-based company’s net profit increased 66% in the third quarter to Rs 326.5 crore, while revenues stood at Rs 2,023.7 crore.

The L&T group company is expected to grow faster in the coming quarters, Chatterjee said, on continued demand from clients, particularly in the technology and consumer products space.

Mindtree won new deals worth $312 million during the December quarter and said that its deal pipeline was the strongest it has ever been.

“We are in a strong position to tackle any opportunities that come our way. Profitable growth and building a strong pipeline were very important to us, and the most important thing is can you build a foundation that makes you ready to accelerate, and that’s what we have done,” Chatterjee said.

The company will also focus on inorganic growth, looking at companies that would either augment its capabilities or help it accelerate in specific technology areas.

“Mindtree’s 3QFY21 earnings report reflects robust broad-based growth, with non-Microsoft clients driving revenue led by ramp-up of key large deals like Realogy. Profitability continues to surge, and this was the 6th successive quarter of sequential EBIT margin improvement, which came in at its highest-ever level, aided by growth, operational efficiency, higher utilisation and offshore revenue mix,” said Harit Shah, lead IT analyst at KR Choksey Shares and Securities.

The company has put in place new leadership teams in continental Europe to tap into the growing business opportunities in the Nordic and DACH countries.

“Over a period of time, we will make the right investments in the right countries,” Chatterjee said.

In the last few months, Mindtree has won significant multi-year deals from companies in the region, in line with its strategic focus of pursuing bigger, longer term projects.

“We have traditionally not done much in Europe, but we can see a lot of European companies being very open to looking at multi-year transformation projects,” he said.

Mindtree is also focusing on reskilling its workforce.

In the previous quarter, total utilisation was at about 83%. “We have been able to redeploy the talent on the bench by reskilling them and we will continue to do that as we go along,” said Chatterjee.

On Tuesday, Mindtree’s share price rose 1.19% to Rs 1,680.30 apiece on the Bombay Stock Exchange even as the benchmark Sensex ended the day 1.72% higher at 49,398.29 points.