Peter Traynor recently spoke with Joseph King, who is the SVP, Global Marketing at MindTree Consulting and Sameeth Varghese, who is MindTree’s BI Practice Lead and they discussed corporate strategy, offshore consulting, and product development at the company.
Peter Traynor: Please tell me about the company’s history and what you’re doing currently in your space.
Joseph King: We started the company in August of 1999 and I’m part of the founding team, having joined a month after the company started. When we started the company, we wanted to come up with a unique proposition. We thought that if we could join forces by combining the US consulting experience we have with people who know how to deliver good quality software development offshore, then we could blend the model and have a match.
Initially, while the other co-founders of MindTree including myself were still at Cambridge Technology Partners (CTP) we were getting frustrated because while our clients loved us and our work was well received by them, we were forced to limit the amount of repeat business because their (CTP) pricing was prohibitive. Customers were wondering where the total lower cost of ownership of working with us was.
On the other side of the world, a number of senior people at Wipro, including the CEO, were interested in starting a new company because India was known for great maintenance, and basic code development, but they were not entrusted with higher-value end IT solution work. These people were equally frustrated because their (Wipro) clients entrusted only low-end maintenance work to be outsourced to India. They wanted a get a chance to bid on higher-end consulting work. That is why we joined up to start MindTree. Now there's no frustration with our clients!
In 1999 working offshore was considered fairly unique but today it’s practically mainstream for companies to be looking to go offshore. Today, the front-end definition and design work is done here in the U.S. while the building and maintenance of solutions is done offshore in India.
PT: So, corporately, where are you located?
JK: We are co-headquartered in Bangalore, India and Warren, New Jersey. We also have three development centers in Bangalore and Chennai, India and 18 locations globally.
We took the company public last March in India, our revenue guidance is $186 million and we feel pretty good about that. We have about 5,600 people worldwide, of which about 4,500 are based in India.
We were the fastest Indian IT services company to reach $100 million in revenue. We started off by doing core e-business development work since that was what was hot and happening in the late nineties and the early twenty-first century. But along the way, we’ve added a lot of really fast-growing practices, of which probably business intelligence and data warehousing are our fastest growing.
PT: That sounds like tremendous growth over just nine years.
JK: The whole industry’s grown and we’re really proud of our accomplishments but there’s a lot of work left to do.
PT: What is MindTree’s tax situation, if you don’t mind my asking? Do you pay taxes in both India and the U.S.?
JK: We do. We file for income taxes both in India and the U.S.
PT: Sameeth, I understand you’re heading up the BI component stateside. Please tell me more about what you do.
Sameeth Vargehse: I am the BI Practice Lead for the United States. The base team actually sits in Bangalore and I oversee all the projects in the U.S. such as getting new business, pre-sales, relationships with customers and so forth.
PT: Do you also do consulting, and what sectors are you primarily involved in, in terms of verticals?
SV: Consulting is also part of my portfolio. Currently we concentrate on manufacturing, consumer packaged goods, retail, banking, financial services and insurance.
PT: Of the industries you’ve mentioned, which are the fastest growing in your view?
SV: From a BI perspective what we’re currently seeing is that the CPG world definitely comprises one of our more active customers and other active customers would be travel and transportation. However we are seeing a lot of surge right now as far as R practice is concerned and also a lot from the insurance and financial services sectors.
JK: From a revenue standpoint, our two biggest practices industry-wise are manufacturing and banking and financial services.
PT: What rate has your revenue been growing on average?
JK: 30 – 40%.
PT: Impressive. Could you tell me more about your RUBIC product?
SV: RUBIC is an acronym for Re-Usable Business Intelligence Components and is actually more of a framework than a product. We use it as a solution-and-answer when we go into customer engagements. RUBIC essentially has three components which are the domain stack, technology stack and the master data management stack.
The domain stack is made up of all the BI and DW domain knowledge which is codified into KPI catalogs. The technology stack acts as a fast-forward solution whereby in the entire delivery cycle, we cut down time to delivery.
The last aspect of RUBIC is the MDM stack. One of the things we’ve realized is that master data management is an industry of its own and one of the biggest pinpoints into which BI initiatives fit. The BI practice really incubated the MDM practice.
PT: How so?
SV: In the sense that we are the people who have faced the brunt of all the master data and data quality issues in all our engagements. Most of our go-live date slippages are failures that have typically been associated with data quality and a lot of our effort in the analysis phase goes towards getting that data quality streamlining in terms of data analysis and so forth which are all the backbone and components of MDM.
So a few years ago we took the decision that MDM itself is an area into which we need to put extra effort and we incubated the MDM Practice into the BI Practice.
PT: That’s very interesting especially since many BI solution providers try to completely stay away from the data quality question, on the grounds that it is not their problem.
SV: We will never be able to fix data quality – in the end it is the business owner who fixes the question of quality -- but they may require guidance and we’re in a good position to provide that guidance. Doing that analysis is a must for any of the BI solutions that we deliver. We have experience and expertise in doing data analysis and a data health check after which we inform the customer of what they need to put in place.
PT: At some point you must see opportunities for the rest of the organization to come in and do some work that is non-BI related. Is that typical?
SV: That is part of our stack now. If you look at the service offerings we have in the MDM area one of the offerings is a consulting group which is strongly focused on business strategy, business processes and so forth. In conjunction with the consulting group we also offer data governance and data stewardship as a process offering for business. We also offer enterprise-wide MDM reflection so if there are sources which need to be modified so that the customer can master all MDM strategies going forward, we can make those modifications.
PT: It seems you have a lot of touch points with your customers and enjoy fairly close and lasting relationships with a number of them.
JK: Absolutely. Over 90% of our revenue is repeat business from customers. As Sameeth mentioned, our BI practice is much more than just RUBIC – there is consulting, full end-to-end implementation of any packaged solution out there and we still do a lot of internet technology business work, Java and .NET development and maintenance to mention but a few.
PT: From a corporate point of view I’m very interested in the offshore model. Tell me more about it, please.
JK: You need to go to India! I tell a lot of editors that going there will bring it all to life for you. To provide some context, when we first started there was a significant cost difference between India the U.S.; you could easily say that there was a 25-40% cost savings. Instead of hiring software engineers to build code and solution here in the U.S., we do it offshore. The engineering schools in India are on par, if not better, than the ones here in the United States so you don’t lose out on the quality.
In the eight years or so since we started MindTree, however, the cost differential between the U.S. and India has shrunk. The Indian Rupee has appreciated dramatically so we cannot say that building a solution offshore will save you 25-40%; it will be less.
PT: Bangalore seems to be a large center for this kind of work.
JK: Absolutely. It is the Silicon Valley of India. We have Centers of Excellence where you would be able to see activities such as the product being built or visit some of the customer teams and see the back-and-forth regular communication between the customer and project team onshore.
PT: What are the barriers to entry with an offshore model?
JK: Offshoring is here to stay. I don’t think there are any barriers but I think that the investment is sometimes misunderstood from the customer standpoint. You are not just throwing code over a wall with the hope that your requirements will be understood.
Directors of BI or whoever is driving BI initiatives for an organization need to be constantly working with their onshore team but they probably also need to go offshore and spend some time with the offshore team. This is because they’re basically adopting this team for however long it takes to build the solution as part of an extension of their IT team.
Oftentimes the hidden costs of an offshore relationship are misunderstood such as time spent out of the office going to Bangalore, the late-night conference calls and if those investments are not fully realized and embraced then just like anything else, it is going to fail.
PT: I’m sure there is a lot more overhead than people initially think. Who are your major competitors in this space?
JK: MindTree’s major competitors are Whipro – and as mentioned earlier, our CEO ran Whipro for 18 years before starting MindTree. Others are InfoSys and Cognizant Technology Solutions which is a great fast-growing company from India as well. We compete more or less regularly with Cognizant and Whipro.
PT: So you’re going to catch the frontrunners at some point?
JK: I don’t know because they’re growing at a very admirable pace and we actually like our positioning. We consider ourselves – and our customers tell us – as the best mid-sized company out of India. I think some of the companies in the same space are actually too big for a lot of their U.S.-based customers. When you’re big, with some of those competitors, if you’re not spending $5, $10 or $15 million dollars offshore not just on BI but your total portfolio of offshore projects, you’re not getting a lot of their attention.
Whereas for us, if a potential client wants to start small with a couple million dollars or even less just to test the waters and make sure they understand how to do offshore work, we’re happy to do that type of work. And it eventually grows – as evidenced by the repeat business.
PT: This has been very illuminating. Thank you very much Joe and Sameeth; it was a pleasure speaking to you both.
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