MindTree Sets the Standard for Mid-Sized IT Firms
(June 29, 2005 – India West Business Magazine)By Richard Springer
Wipro, Infosys and Tata Consultancy Services have generated most of the buzz in the business press as they have steadily moved up the software services and consultancy value chain globally, but don’t underestimate the caliber of India’s leading medium-sized IT firms.That was the message conveyed to India-West last week by Subroto Bagchi, co-founder, Chief Operating Officer and head of U.S operations for MindTree, a Bangalore and Somerset, N.J. based IT firm.
MindTree was launched in 1999 as a “hybrid global company” in “ both end of the world,” Bagchi said, adding, “I love that as a differentiator.”
Co-founded by 10 industry professionals from Cambridge Technology Partners, Lucent Technologies and Wipro, MindTree raised $24.6 million in two financing rounds in 1999 and 2001, but still has “ half of that money in the bank,” he said. “We have spent very cautiously.”
A former vice president of product realization at Lucent Technologies from 1998-1999, Bagchi was chief executive of Wipro’s global R&D division and helped launched Wipro’s U.S. operations in silicon valley, where he lived in 1990-93.
Bagchi pointed out that MindTree has eschewed business process outsourcing chores in favor of high-end IT services and research and development. The company high-end IT practices was “ built from the ground up” on day one, he added.
A company like auto manufacturer Volvo chose MindTree as its first outsourcing partner because it “would rather be on the top five” customers of a mid-sized Indian IT Firm, than just “one of 100” for one of the giants, Bagchi related.
After two years as a customer MindTree reviewed at the Swedish company’s business practices and developed a code to identify the company’s common practices that could be codified, resulting in simplifying about 20 percent of total operations.
Coincidently, a day before the pre-scheduled interview with India-West, MindTree announced it would acquire Bangalore-based Linc Software Services Pvt. Ltd., an enterprise resource planning product support and web development firm. The purchase price has not been disclosed. It was the third acquisition for MindTree in the past year.
During the conference call, Joseph Kind, MindTree senior vice president of U.S sales and marketing, said MindTree, after adding Linc’s more than 220 employees in the US., U.K., Singapore, Switzerland and Australia, world have a total workforce of about 2,100 employees in Indian and about 350 to 400 outside India, including between 175 and 200 in the U.S.
Founded in 1988, Linc provides software services to the manufacturing, banking and insurance sectors. The company’s customers include ConAgra’s Foods, Unilever, Novartis and Viacom.
“There is a large installed base of IBM i-Series ( Formerly AS/400) systems and a strong demand for application development and maintenance on these platforms the world over,” MindTree CEO Krishnakumar Natarajan said in a statement,” As an important component of our growth strategy the acquisition of Linc Software will enable MindTree to strengthen its capabilities in this space.”
Bagchi said MindTree became the first Indian IT firm to reach the $50 million revenue target within five years of its founding. It took Sat yam 11 years, Wipro 12 years and Infosys 17 years to hit the mark, he pointed out. Sales for the fiscal year that closed March 31 were about $55 million.
King said that, with the Linc acquisition, a sales target of between $95 million and $100 million is reachable by March 31, 2006, with the total workforce predicted to hit 3,200 by that time.
He said MindTree Chairman Ashok Soota sent an e-mail to employees saying, “Why not(a sales goal of) $100 million?”
Bagchi said MindTree is the only Indian Company that made all three “ Best Employers in India” lists compiled by Best Places to work, Hewitt Associates and Dataquest. The employee turnover rate, King said averages a low 11 percent, compared to 60 percent or more in the BPO space.
MindTree has installed an employee value system that Bagchi says is more than window dressing, with constant reviews on how employees accomplish their tasks(60 percent) and measure up to the value system(40 percent). It is called CLASS( Caring, Learning, Achieving, Sharing and Social Responsibly).
A potential that can mesh with the system and can be trained to do the work is preferable to someone with talent, but who is unable to adopt the value system, he said.
Asked about the company’s future, Bagchi anticipated the question. “We are not looking at an IPO(Initial Public Offering) or another funding round right now, but we see an IPO possible in about 18 months,” he said.
