Outsourcing: Gopinathan Padmanabhan, Executive VP and Head of Global Delivery, MPhasiS (Part 1)

Two former Citibank executives came up with the idea for MPhasiS in 1999. A merger between U.S.-based IT consulting company MphasiS Corporation and the Indian IT services company BFL Software Limited in June 2000 produced MPhasiS Limited, a global company that provides business process outsourcing services as well as applications and infrastructure services. One of the largest IT services companies in India, MPhasiS boasts revenue in excess of $1 billion.

Sramana Mitra: Hi, Gopi, let’s start with an introduction of you and your company to set a little context.

Gopinathan Padmanabhan: Let me first tell you about MPhasiS. MPhasiS is one of the largest IT service providers based in India. We are a majority HP owned company. About 61% of the company is owned by HP; it’s a majority shareholder. The balance of stock is held by the public. We are listed in the Bombay Stock Exchange and the National Stock Exchange of India. We are an independent board-managed company. The company was established as a small startup back in 1999 by Jerry Rao, a well-known figure in the Indian IT industry, and an ex-Citibank colleague. Over time, we have grown aggressively, primarily through mergers, acquisitions, and so on. In 2010, we crossed $1 billion in revenue. Today, we are considered to be the sixth or seventh largest IT services company based in India.

SM: What is your core business?

GP: The core business is IT outsourcing, IT services, a full range of IT services.

SM: Is there a specialization?

GP: We cover the entire spectrum: application services, development application support, ADM. We provide infrastructure services and BPO services. As a part of our recent strategy, we have decided to be a hyper-specialized company. Our initial focus areas are banking, capital markets, and insurance. We call it BCM, for banking, capital markets (BCM) and insurance. We intend to specialize in these areas for a while. We are also a full-service provider, but going forward, we will specialize and invest more in BCM and insurance.

SM: I see. So, that’s a forward-looking strategy? That is not what you’re doing now? Today, it’s a broad spectrum IT services company?

GP: It is forward looking, but we implemented the strategy starting in fiscal year 2011. For the last six quarters, we have started on this journey of hyper-specialization. We are making good progress, but we continue to provide services to other sectors, industries, domains and so on, and we provide a lot of horizontal service offerings, which are industry agnostic.

SM: You said that is your strategic decision going forward. Would you provide the analysis behind that decision? What is going on in banking and financial services that prompted you to make that choice?

GP: Today, with about roughly $1.1 billion in revenues, we are the sixth or seventh largest company in India. Once we crossed $1 billion, the management team sat together and planned where to go from here. One thing we quickly realized was that the way we were operating, we were trying to be everything to everybody. Whichever customer, whatever he/she wanted, we would try to provide those services. Again, as I go back and trace the history of the company, MPhasiS was acquired by EDS (Electronic Data Systems) in 2006. Subsequently, EDS was taken over by HP in 2008. Because of the pedigree and history, we have marquee customers in almost every industry segment or vertical that we operate in. Then we realized that going forward, this strategy – trying to be everything to everybody – will not work. Because then you’re an also-ran. You can’t be the best in everything.

We thought that the way to succeed was to sharply focus on certain areas and become one of the best in the world in that particular area. That’s the basis of our Hyper-specialization strategy.

SM: I understand what you’re talking about. Indian companies often have this everything-to-everybody approach. But my question is, why did you choose financial services? What is the competitive dynamic in financial services that prompts you to believe that you will succeed in financial services?

GP: The first and foremost reason is historically, since the company was started in 1999/2000 by two ex-Citibank executives, their initial contacts were in the [financial services] space. A lot of work that we initially started doing was in that space. Because of their contacts, relationships, and networks, our initial successes, etc., we won several deals in the banking sector, capital markets, and from insurance customers. Some of the best, largest banks in the world are already our customers. That’s an area that we’re good at. We have solutions in that area, great customers, long-term relationships that have been going on for more than 10 years and grow steadily. Through those established relationships, we have a good reputation.

That’s one of the primary reasons. If you’re good at this; you’re doing a great job; you have great customers; you have great solutions. It obviously came up as a primary candidate to be considered. When we [looked at] HP’s portfolio, we realized that HP pretty strong in manufacturing retail solutions and to some extent, telecom. It made sense for us to operate in an area that complements HP’s strengths as we do go to market with HP to win and deliver deals to HP’s customers.

This segment is part 1 in the series : Outsourcing: Gopinathan Padmanabhan, Executive VP and Head of Global Delivery, MPhasiS
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