Bengaluru-based IT services firm Mindtree has delivered strong revenue of $422.1 million, up 7.2% sequentially in constant currency and an Ebitda margin of 21% for Q2, marking its seventh consecutive quarter of more than 5% revenue growth and eighth consecutive quarter of over 20% margin. Debashis Chatterjee, CEO and managing director, Mindtree, talks about the demand environment, attrition and hiring, and progress on the LTI-Mindtree merger, in an interview with Ayushman Baruah and Rajesh Kurup. Excerpts:

How do you see the demand environment in the coming quarters?

Our strong performance this quarter reaffirms that our capabilities and offerings continue to resonate with our clients … Investments in digital transformation are driven by long-term strategic imperatives around delivering modern enterprise architecture, resilient infrastructure, scalable digital-ready foundation, and innovative experiences. As such, they are largely independent of market cycles. We expect the near-term softness indicated by macroeconomic indicators to be transitory. Market volatility is known to fuel a surge in demand for technology. The current period of volatility is unlikely to be an exception with enterprises continuing to secure and advance gains from their shift to digital, cloud-driven businesses.

Are you seeing a dip in deals and a cut in client budgets due to fears of a recession?
There are no indications yet of any significant change in client behaviour. The demand environment for integrated digital transformation capabilities is broad-based and continues to be robust. Our order book, which rose 44% year-on-year to touch $518 million at the end of the second quarter, continues to have a healthy mix of annuity and transformational deals. In fact, our H1 signings crossed $1 billion for the first time in our history. Despite the macroeconomic environment, while clients in certain sectors may take longer to ascertain their spending priorities, they are unlikely to altogether stall their digital transformation programmes.

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How is the pricing looking?
The pricing continues to be stable with an upward bias, especially in deals that involve premium digital skills.

While attrition in the industry is rising, hiring seems to have moderated and there have been reports about offer letters being revoked. What’s the scene at Mindtree?
During the September quarter, we onboarded more than 3,100 professionals to close the quarter with a global headcount of more than 38,200. We continue to be consistent in our pace of campus as well as lateral hiring. We are now looking at our hiring plans from the perspective of the increased capacity and economy of scale that the merger of Mindtree and LTI will present. We expect hiring to continue at a steady rate, while accounting for talent synergies between the two merging companies. We remain committed to honouring every offer.

Where do things stand in terms of LTI-Mindtree merger? When will it complete?
With the merger of Mindtree and LTI, we are all set to enter the big league of top-tier IT services companies. The objective of the merger is to bring together the complementary, end-to-end capabilities of two highly successful companies and capture an even larger market and wallet share across industry groups, service lines, and geographies …We are in the last leg of regulatory approvals and expect to close the merger before the end of this calendar year. In the run-up to these approvals, the two companies have jointly evolved the new structure of the merged entity through a steering committee, planned vital aspects of transition considering ongoing client projects, and worked out a transition and knowledge transfer process.

What are your plans in the metaverse and how do you think the technology is evolving?
We have been making investments in metaverse solutions and capabilities to extend our technology and design thinking leadership into an integrated, consulting-led metaverse offering. Clients across verticals are showing interest in metaverse and working with us to determine the right use cases as well as the potential value. Two approaches are being taken. One is to build a custom metaverse and implement use cases for better customer or employee engagement. The other is to create a virtual presence in established third-party metaverses. Our clients are showing interest in both these areas based on organisational and strategic considerations. We are looking at three broad categories of use cases. The first is employee metaverse to enhance experience and engagement across the entire employee journey. The second is customer experience and engagement to enhance digital presence and deliver immersive experiences. The third is industrial metaverse, which involves leveraging our Mindtree NxT capabilities such geospatial solutions, IoT platforms, and digital twin solutions.