 "We'll be consistent with our break-even plan: Ashok Soota")
Happiest Minds Technologies, the IT services firm founded by industry veteran Ashok Soota has completed one full financial years of its operations on March 31, 2013. Based on the revenues it reported in the fourth quarter of FY13, the company has said its annualised revenue run rate is now $20 million. The company has also reiterated that it would become the fastest Indian IT services company to cross $100 million in revenues. In an interview with Bibhu Ranjan Mishra, Soota who is now the executive chairman of the company discusses the future of the company and the industry. Excerpts:
Looking back, are you satisfied with the kind of growth Happiest Minds has seen in the last four quarters?
Firstly, the fact that we have reached the milestone at the end of the fiscal is very important. We are happy that we have set some milestones. For example, at the end of the first year, we are 800 people organization with 45 customers including few Fortune 500 ones.
Do you think that the growth could even have been much faster if the market conditions were conducive?
It may have been a little bit faster. Market conditions may have affected some large players, but we have largely remained unaffected.
What is the timeframe you are giving to cross $100 million in revenues?
The previous record by any Indian IT company was six year; we are saying we would do it faster than that.
By when do you expect to break-even?
This is a part of our business plan that we had given to our VCs. We will be consistent with that plan.
What are the types of engagement you have with your clients; are they limited only to specific areas?
Obviously, we just began the journey. Many of these relationships may be in the early stages. But many of the relationships have already been demonstrated by a series of projects. Depth in relationship comes by consistently following that process. There are few customers who have already chosen us as their preferred IT partner.
You have been part of the IT outsourcing services industry from the very beginning. What are the changes you have noticed in terms of customers’ buying habits since then to now?
Customers’ expectations are much higher today than before. In the 90’s, when we were growing Wipro, we wanted a company with good governance which has the ability to scale. The value proposition at that time spoke for itself because there was a huge price difference and the industry was growing at 70-80%.
However, the industry, subsequently, was little slow in realizing the technological changes and integrating those in their solutions. Our (Happiest Minds) effort is actually to fill that vacuum and deliver rich solutions.
Do you think that the industry growth is coming down because it failed to keep pace with the technological changes?
To be fair, it is a $100 billion industry now and it may not grow at the old growth rate. Of course, global slowdowns have also slowed down the growth. But Indian companies are still getting market share globally.
By when do you expect the industry to see a clear recovery? The wait seems to be getting longer and longer?
I actually endorse the Nasscom statement that this year will be better than last year. And I think the year after will be probably be better that the current year unless some huge catastrophes happen.
The adoption of IT is being driven by a need. So if you have a slow year because of recession, the market will again take off after a year or two. It is because the demand was very much there but just that they didn’t sanction a budget.
Now the industry seems to be heading towards jobless growth, which means it is growing without much of headcount addition. Happiest Minds’s strategy has been to keep itself lean from its inception. How is this panning out?
Non-linearity comes through 2-3 different ways. If you build more annuity stream of business, it improves productivity year after year. Secondly, if you have your own intellectual property around which you built solutions; and thirdly you are able to do replicable sales customizing the solutions you already have. We are following all these to the core.
Looking back, are you satisfied with the kind of growth Happiest Minds has seen in the last four quarters?
Firstly, the fact that we have reached the milestone at the end of the fiscal is very important. We are happy that we have set some milestones. For example, at the end of the first year, we are 800 people organization with 45 customers including few Fortune 500 ones.
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We saw consistent growth of over 50% in at least three of the four financial quarters last year. It validates that we are on our way to become the fastest Indian IT company to reach $100 million in revenues and our plan to go public in next 5-6 years. Of course, in a small base we have to grow faster, but what is more important is to do it consistently.
Do you think that the growth could even have been much faster if the market conditions were conducive?
It may have been a little bit faster. Market conditions may have affected some large players, but we have largely remained unaffected.
What is the timeframe you are giving to cross $100 million in revenues?
The previous record by any Indian IT company was six year; we are saying we would do it faster than that.
By when do you expect to break-even?
This is a part of our business plan that we had given to our VCs. We will be consistent with that plan.
What are the types of engagement you have with your clients; are they limited only to specific areas?
Obviously, we just began the journey. Many of these relationships may be in the early stages. But many of the relationships have already been demonstrated by a series of projects. Depth in relationship comes by consistently following that process. There are few customers who have already chosen us as their preferred IT partner.
You have been part of the IT outsourcing services industry from the very beginning. What are the changes you have noticed in terms of customers’ buying habits since then to now?
Customers’ expectations are much higher today than before. In the 90’s, when we were growing Wipro, we wanted a company with good governance which has the ability to scale. The value proposition at that time spoke for itself because there was a huge price difference and the industry was growing at 70-80%.
However, the industry, subsequently, was little slow in realizing the technological changes and integrating those in their solutions. Our (Happiest Minds) effort is actually to fill that vacuum and deliver rich solutions.
Do you think that the industry growth is coming down because it failed to keep pace with the technological changes?
To be fair, it is a $100 billion industry now and it may not grow at the old growth rate. Of course, global slowdowns have also slowed down the growth. But Indian companies are still getting market share globally.
By when do you expect the industry to see a clear recovery? The wait seems to be getting longer and longer?
I actually endorse the Nasscom statement that this year will be better than last year. And I think the year after will be probably be better that the current year unless some huge catastrophes happen.
The adoption of IT is being driven by a need. So if you have a slow year because of recession, the market will again take off after a year or two. It is because the demand was very much there but just that they didn’t sanction a budget.
Now the industry seems to be heading towards jobless growth, which means it is growing without much of headcount addition. Happiest Minds’s strategy has been to keep itself lean from its inception. How is this panning out?
Non-linearity comes through 2-3 different ways. If you build more annuity stream of business, it improves productivity year after year. Secondly, if you have your own intellectual property around which you built solutions; and thirdly you are able to do replicable sales customizing the solutions you already have. We are following all these to the core.