 "Mphasis")
Mid-size information technology (IT) services company Mphasis today launched its new branding, under which it has dropped the name of its promoter Hewlett Packard by changing its tag line from 'an HP company' to 'unleash the Next'.
The re-branding comes at a time when the Bangalore-based company has been witnessing a decline in revenue from the promoter for several consecutive quarters and amid constant speculation that HP may be looking to exit the company.
Stressing that the new branding was targeted at conveying a 'fundamental shift' in Mphasis' functioning and focus areas going forward, CEO Ganesh Ayyar said, the decision to change the tag line has nothing to do with any speculations.
“There is no change in the shareholding of HP or our relationship with HP as a client,” Ayyar said, “In September, we had a strategic session with our board, which includes representatives of HP, and they are fine with the re-branding. In fact, we have full backing from them as they also want to see us evolve and grow.”
HP, threw its wholly-owned subsidiaries--EDS Asia Pacific Holdings, EDS World Corporation (Far East) & EDS World Corporation (Netherlands)--hold 60.49% stake in Mphasis. Additionally, Mphasis gets about 40% of its revenue from the HP channel (both HP as a client as well as partner who gives clients to MphasiS), as against close to 55% around a year ago.
With an aim to arrest this declining revenue from HP channel, as well as to grow its direct-channel sales, Mphasis has been undertaking several changes in its functioning over the past few years. The company had earlier decided to narrow its focus on select few verticals including banking and capital markets, and insurance. Going forward, Ayyar said, Mphasis would move towards extreme specialisation.
“In its current form, the IT services industry will die in a few years,” he said. “For us, the next $1 billion (of revenues) will not come from where the earlier $1 billion came. There will be a fundamental shift in the IT services sector and things like cost arbitrage, English language and location won't be the real competitive factors.”
Among other things, Ayyar said, Mphasis will now be more focused on revenue per employee and not on the number of employees, also it would focus on executing orders with a combination of on-site and offshore capabilities rather than only the latter. Mphasis will also look to partner with big companies as well as startups as it enters its next phase of growth, and also have a shift in its compensation model, which would be linked to specialisation.
According to experts and analysts, the decision to shed the promoter's name from its branding could benefit Mphasis in the long term.
“Most of the problems that Mphasis has been facing are around HP, both as a promoter and as a partner,” a senior analyst with a domestic brokerage said. “It's very positive that they have decided to exclude HP from their branding.”
