Drop in margins was due to increased hiring during June quarter: Dayapatra Nevatia, ED & COO, Mindtree

Our pipeline has a robust mix of annuity and transformational deals, and a healthy balance of new deals as well as renewals.

In the latest quarter, there was an 86% quarter-on-quarter increase in learning hours.

By Srinath Srinivasan

Bengaluru-based mid-cap IT services player, Mindtree, posted strong Q1 FY 22 results with a deal pipeline worth $504 million. The company also witnessed a contraction in operating margin and increased hiring in Q1. The company’s chief operating officer and executive director, Dayapatra Nevatia, talks to FE’s Srinath Srinivasan about winning deals and the plans to expand margins in the upcoming quarters. Edited excerpts:

Q: What is the composition of your deal pipeline like?

Our pipeline has a robust mix of annuity and transformational deals, and a healthy balance of new deals as well as renewals. We continue to incubate deals by mining strategic accounts and are very pleased with our ability to cross-sell and up-sell within and across our client base. We are increasingly signing multi-services and multi-year deal. The pandemic has turned digital transformation into a matter of urgency for clients across industry sectors, leading to increased budgets for programmes around customer experience, IT modernisation, cloud and platform-driven operating models, data and analytics, automation, cyber security, collaboration, and remote work enablement.

Q: What led to the sequential margin contraction?

The drop in margins was primarily due to increased hiring during the quarter, including specialist skills that come at a premium. We added a net of more than 3,400 Mindtree Minds, our highest-ever quarterly net headcount addition, to close the quarter with a global headcount of over 27,000. We are further ramping up hiring to meet the growing demand for our services and will soon initiate a second round of wage increases for eligible Mindtree Minds up to the mid-management level.

Q: Where do you expect tailwinds coming from in Q2?

Tailwinds are especially strong in our CMT (Communications, Media, and Technology) and RCM (Retail, CPG and Manufacturing) businesses. We see a growing canvas of opportunities to envision and power agile and data-driven businesses with consumer experience at their heart. To seize these opportunities and accelerate growth, we are going all out in building new-age capabilities, strengthening our work ethos, and making our business model more resilient.

Q: Your peers in the industry are setting up digital-first teams and hiring special talent. Are you onto some initiative like that? What is your general hiring outlook like for the rest of the year?

We expect our intake of both campus and lateral hires to go up. Considering our robust pipeline and order book, there will be increased hiring in areas such as cloud, customer experience, data analytics, and security. We will also look at inorganic means to complement or augment our capabilities in strategic focus areas.

A case in point is our recent acquisition of L&T NxT, which has advanced our “Edge-to-Experience” proposition and strengthened our ability to re-imagine and drive the Industry 4.0 vision, leveraging IoT, data analytics, and cloud technologies. Upskilling, reskilling, and cross-skilling are at the heart of our talent strategy. Our “learn anywhere, anytime” approach in delivering quality learning at scale is bearing fruit. In the latest quarter, there was an 86% quarter-on-quarter increase in learning hours.

Q: What is the status of employees returning to the workplace across Mindtree offices globally? What is the state of your vaccination drive?

More than a third of our headcount has been covered to date as part of our vaccination drives. Many Mindtree Minds have had the vaccination on their own. We will take a call on return-to-office at an appropriate time, based on government advisories and expert recommendations. The post-pandemic work model is still being worked out. A flexi, hybrid model looks most likely, where we might allow Mindtree Minds to choose to work either from home or office, or opt for a combination of the two, subject to client and security clearances, and company considerations.

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