Mindtree has formed taskforce ‘Work of the Future’ to study Hybrid Model: Vinit Teredesai, CFO
Vinit Teredesai, Chief Financial Officer, Mindtree, talks about Q3FY21 numbers, expected growth in TCV and cloud platform, budget expectations and work from home model among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: Q3FY21 numbers have beaten the street estimates, especially the margin stands at 19.6%. What led to this kind of performance and how sustainable it is?
A: We started a lot of cost optimization project last year and its benefits were seen quarter-on-quarter. In the first quarter of this year – after it was struck by the pandemic – our revenue fell by almost 2% because we are doing a lot of work in the travel sector. Despite that our margins, both absolute numbers and percentage numbers, went up and its only reason for it was that we reskilled, retrained and redeployed our bench resources, due to which our overall cost was managed to a great level. After that, growth came in the second quarter and we continued with the ongoing cost optimization projects here too. A better growth came in this quarter compared to the second quarter and it has benefitted us a bit. We have been benefitting in a mix of both, growth and cost management.
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Q: On a Year-on-Year basis, your TCV has gone up by more than 50%. Considering the digital transformation opportunity, what is the growth are you expecting in the next one three year in the segment?
A: For the last many years, many companies have been investing in digitalization. Due to the pandemic, many companies that were not investing in digitization, cloud and data analytics are now thinking to invest in it because it is sure that that whatever your business, its backbone would not be strong without the technology and it will face difficulties in sustaining. Right now, the companies are not thinking that the customers will come to them but they have to go to them offer a contactless and seamless experience to them. Whether it is banking or travel or retail digitization is present everywhere. So, I think, the growth momentum will be sustained and continue even after the pandemic comes to an end. Our aspirations are about to reach the industry-leading growth and our communication, media and technology sector, retail, consumer packaging sector are performing well to a great extent. I feel, the banking and financial services vertical will also start performing well. Travel will take some time but it seems that the worst is behind us as far as travel is concerned. If all these engines will start firing then we will be able to show the industry-leading growth by the next year in the same period.
Q: Budget is round the corner. What are your expectations from the finance minister particularly for the IT sector which can help the sector to grow further?
A: IT industry has turned Atmanirbhar to a great extent since last many years. So, we are just expecting that the work from home and office, the hybrid model should continue. The government has granted good relaxations last year in which compliance and regulatory parts will be there in the place for the same. I feel, the government should not limit its deadline till the pandemic lasts but should make it a permanent one, which will be very good. This is a simple expectation from the government.
Q: About 95% of your employees are working from home at present and if this hybrid model remains in place in future as well then do you think that there will be a change in this percentage? Also, tell us about the kind of benefits that you are seeing in it and what has been your experience from this hybrid model in the last one year?
A: We have constituted a task force on it, what we call as a ‘Work of the Future’ in which how will people live, what percentage of people will be there, will they will be in similar to the pre-COVID level or satellite offices will be opened. The task force is working to study these factors. Home infrastructure should be upgraded, so many things are there. So, I will not be able to speak about the percentage, right now, but can just say that work from home was existing even in the pre-COVID time but its implementation was not much but our business model has been implemented successfully, now, due to the COVID. I feel, it will get good momentum.
Q: As per service the line, cloud share has gone up from 15.9% to 19.2%. Where do you see this share by next year in the same quarter?
A: I will not talk quarter-to-quarter. During the pandemic, people have seen that if they have a physical network centre, if there is a lockdown, then to access it, if any problem occurs and maintenance is required, some patches have to be updated, some hardware has to be replaced, then for all these things, I have to go there physically and complete it. Now, if you stay on the cloud then you don’t need security patches as the service provider will continue to do that. Accessibility will be possible where accessibility is there. You can access it from anywhere and you will get agility in it. Earlier, the cloud was supposed to grow exponentially but many people didn’t move there due to the cost factors. However, they have seen its benefits during the pandemic. So, I expect that our revenue contribution will continue to grow on the cloud. Today, we are working a lot on the Azure cloud. Will work on Amazon web services and have also announced Google partnership and we will work on it. If all these factors are combined then the cloud business should increase, from here.