Our order book is $1 bn; rolling-out salary hikes: Mindtree CEO Chatterjee

About 98% of employees of the IT services firm are working from home, but Chatterjee said he is expecting a hybrid work model would emerge

Debashis Chatterjee, chief executive officer and managing director of Mindtree, now regularly plays squash as he has been able to save the time of commuting in heavy Bengaluru traffic while working from home. He joined Mindtree about 17 months back, at a time when the IT services company was facing a leadership crisis and L&T had acquired the firm. Then a few months later the coronavirus pandemic hit, creating a lot of uncertainty for the industry. But a lot has changed in the company since then under his leadership. In an interview with Peerzada Abrar, Chatterjee said in the first 9 months of this financial year, Mindtree reported strong deal wins touching the $1 billion mark in terms of the order book. Chatterjee implemented strategies including rebuilding the leadership team to overcome the challenges and accelerate growth in the new normal. Edited excerpts:

How do you see the company’s business performance?

This quarter has been pretty good for us. We had a broad-based profitable growth. The revenues came in at $274.1 million. Traditionally, this is a seasonally weak quarter. But we had a five per cent sequential growth, our EBITDA came at 23.1 per cent - this was also significantly high than the previous quarter. The growth was broad-based across industry verticals, geographies and service lines we operate in. We built a strong pipeline and our order-book has been healthy. In the first 9 months of this financial year, we touched the $1-billion mark in terms of the order book. Clients have been satisfied. We have now reached a stage where we are ready to accelerate our growth in the new normal. 

You joined Mindtree in late 2019 at a critical time when it was facing the leadership challenge and was acquired by L&T, what was your strategy to overcome these challenges?

The situation where I got in was very unique and challenging. I had to figure out a way to fix it. We came out with some short-term immediate and medium-to-long-term measures. We formed a large-deals team. We wanted to create certain deals which are more multi-year deals because that was something which was lacking in Mindtree at that time. The CEO-1 leadership was all gone by the time I came in. So, I had to completely rebuild the leadership team. I decided that I will hire leaders from tier-1 organisations. I wanted to have a leadership which has seen growth and knows how to scale. Now, the entire leadership is in place with experience from tier 1 companies. Also, the strategy was, this company had reached a billion-dollar mark (revenue) over the last 20 years,  there must be certain good things in it. Rather than reinventing the wheel, I tried to understand the key strengths of Mindtree. Then my strategy was driven around how to leverage the strengths and build further on that but at the same time stay focused in terms of our efforts over those specific strength areas. That is how the 4x4x4 (strategy) evolved which is the 4 geographies, 4 industries and 4 service lines. I feel very confident that the challenges I saw almost 17 months back are over. Now it is more about accelerating growth in the new normal.

A few months after you took over as CEO, the coronavirus pandemic hit, what was your strategy to deal with the pandemic?

The first thing that crossed our mind during the pandemic was that we need to ensure that clients are safe, we can still deliver for them and at the same time Mindtree Minds (employees) are safe and we can assure their safety and health needs. We also had a peculiar situation where a lot of Mindtree Minds had to be brought back from onsite locations to offshore because a lot of clients especially in the TTH (travel, tourism and hospitality) sector started ramping down. It was very challenging. But Mindtree is not only a digital-first company for clients. Everything is done on digital platforms. We set up a war room – the first focus of this was to make sure that those (employees) who need to come back, we can bring them back to India safely and second was how do we (start) work from home (WFH). I took around  7-10 days to move all the work from home. That was possible because there was a remote working procedure already established in the organisation. There was a zero disruption in terms of business. The lateral onboarding was also entirely done digitally during the pandemic.

What has been the impact of the pandemic on the industry and for Mindtree in terms of acceleration of technology and winning large deals?

The pandemic has taught customers that you can really work with a company like Mindtree and you can do offshoring as long as you can cover all the risks. During the pandemic, we actually closed the deals where we did not have any physical interactions with the clients. We did virtual collaborations. Even the customers did not expect that we will be using (these platforms) to such an extent. The customers wanted their business to go on and somebody who can support them in a reliable fashion. Barring a few situations where clients insisted that people have to come to the office because of some hardware or software needs, most of our clients were very amenable to help us to work from home. When it comes to security and the protocols, there were a lot of things already existing in Mindtree that helped. But we are (further) strengthening those policies. The offshoring, remote working and hybrid delivery models are going to stay. When we started ‘Agile’ projects, we used to get the entire team together. Then we evolved into distributed ‘Agile’ where the teams can be in multiple locations. Now, the pandemic has transformed everything to no-shore Agile – you can do Agile (work) sitting at home. That is a huge change from how we used to deliver for our clients earlier.

How are you preparing your employees for such scenarios and motivating them which includes giving salary hikes?

We have been strongly focusing on reskilling because if you look at the last 2-3 quarters, our utilisation has gone up significantly. Last quarter it was almost 83 per cent utilisation. What it means is that we have been able to grow the revenues without adding too much of bench. We wanted to make sure we utilise all the people on the bench. We now have the ability to hire more and the bench would increase over a period of time to some extent.  We also announced early during the pandemic that we will do the normal promotion cycles –which we did. When the pandemic hit, we kind of deferred the increments but we also said we will (give) the increments as we have better visibility. We are actually in the process of rolling the increments across the organisation.  The current percentage of Mindtree Minds working from home is 98 per cent plus but is that a sustainable thing, probably not. Some people will have to come back to the office – a hybrid work model will emerge.

How do you view the impact of the new Biden presidency on the Indian IT industry including issues such as H-1B visa and what are your plans to expand beyond North America market?

From Mindtree perspective, we have always been more reliant on local hires. If you look at our US (employees), more than two-thirds of our population (were) hired locally. So the dependency on H-1B visa is relatively lower in our organization. But we always monitor the policies very closely and will do whatever is in the right interest of Mindtree as well as the larger ecosystem and align to the policies.US is a very important geography for most IT companies including us. But from my past experience, I have seen that there is a lot of potential outside the US as well. In the 4x4x4 strategy that we adopted, (besides) the US, other geographies are - UK Ireland, Continental Europe and APAC Middle East. The strategy is working out well for us because many of the deals that we have closed in the last 2 quarter which is part of our order book are multi-year deals and most of them are European clients.