Building An Indian Outsourcing Leader: MindTree CEO KK Natarajan (Part 4)

SM: Did the team you assembled focus only on India, or did you have a global view?

KK: We identified people with varied backgrounds intentionally. We went after people who knew the American market well and had worked consulting jobs there. Scott Staples used to work for Gemini and KPMG and was one of the first 10 employees of Cambridge Technology Partners. He knew the solution business very well.

SM: So you targeted people with a solutions background more than a consulting background?

KK: Yes, that was a strategy we found very successful. We also found there was pressure to raise money and we talked with venture capitalists. We had a group of venture capitalists who started tracking us.

SM: Venture capital in 1997 was still very nebulous in India.

KK: True, but by 1999 there were five to seven venture capitalists who were actively looking for opportunities to invest in.

SM: Did you raise any venture money?

KK: Yes. It made things far easier. We talked with Walden, and we knew a couple of the guys there. That relationship was there for us and we felt comfortable with them. Subroto (one of the co-founders of MindTree) was in San Francisco doing some work when we were connected by the VCs with Ashok Soota. Essentially all of us had the same goal and idea, and we were encouraged to do it together. Ashok was my boss and Milpro had decided to leave, which is why he was speaking to Walden.

The selling point that Walden made to us was that we could pitch and think on a much larger scale if we had a guy like Ashok on our team. That led us to have what we joke as a pre-formation merger. He came on as the chairman and CEO.

At some point and time in life you decide there are other things you want to achieve. That is what happened to us. All of the money that we invested in MindTree came from Wipro stock options. At Wipro I got my first stock option in 1985, so that did not happen right away. Fortunately my options did well. That is what allowed us to start MindTree, where we were able to build something of our own and leave a mark.

SM: During the time you were putting MindTree together, what was going on in the rest of the Indian outsourcing industry?

KK: There were a few but not many were thinking in the exact same way we were, although we certainly have a value proposition which can be duplicated. Within three or four years, every large window of opportunity had a number of companies trying to execute a one shot solution building process.

I think all of the other companies were swayed into saying they were an offshore services company. Their value proposition was that they could cut costs 20%-30%. Mastech was in that space, but they had been in India a little longer. At that stage their thought process was not anything like it grew to be, and it was nothing like ours.

We really found ourselves competing against was Sapient. A lot of their thinking became focused on solutions as well. Early on when they started losing deals, they became very intrigued and wanted to discover what they potential clients had seen in us. At the same time, we were fairly open with what we were doing. Over time 60% of Sapient’s workforce came from India, which is interesting because they started as a US-centric consulting company.

This segment is part 4 in the series : Building An Indian Outsourcing Leader: MindTree CEO KK Natarajan
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