"I see Mastek as a leader in the services sectors." - Views on News from Equitymaster

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  • Jul 21, 2001 - "I see Mastek as a leader in the services sectors."

"I see Mastek as a leader in the services sectors."

Jul 21, 2001

Ashank Desai, is Chairman & MD of Mastek Limited is a B.E., M.Tech (IIT, Mumbai) and PGDBA from IIM Ahmedabad. He played an active role in developing the export markets in Europe & the Asia Pacific for Mastek. One of the founders' of NASSCOM, he has been on its Executive Council since 1988. In an interview with Equitymaster.com, Mr Desai talks about Mastek's strategy for growth in the future.

EQTM: How do you see the market environment?

Mr Desai: The environment is challenging in the US of course, due to the impact of the slowdown. This has caused lengthening of sales cycles. However, we do see a lot of interest in offshore development and the result of that will be felt in the time to come.

EQTM: Does that mean we will see an increase in the contribution of offshore development to the revenues?

Mr Desai: We are moving ahead with a strategy to move this number up.

EQTM: How are the billing rates for offshore development moving? Is there a pressure on the billing rates?

Mr Desai: We did not see much of a difference in the billing rates for this quarter (4QFY01) and last quarter (3QFY01). There was no rate reduction in our existing business. The environment is competitive for new business and the situation is challenging on the rates front. The clients are asking for rate discounts only on large orders.

EQTM: What kinds of service offerings are in demand?

Mr Desai: Maintenance becomes the first opportunity for offshore outsourcing, as it is a bit easier to manage. It is basically in technologies like mainframes and client server. New development will be in the e-business area.

EQTM: What are the technologies that Mastek is looking at for growth?

Mr Desai: We have not made any specific projections technology wise, therefore it is a bit difficult to talk on that. However, our strategy is to look out for large outsourcing demands from Fortune 1,000 companies. And in that scenario we are likely to see development on multiple fronts. If you look at our percentage revenues we are evenly spread across new development and maintenance. Therefore, I don't see the revenues mix changing significantly over the next few quarters.

EQTM: Europe dominates Mastek's geographic revenue mix. But this region too is heading for an economic slowdown. Do you see an impact on your revenues?

Mr Desai: We have not seen Europe slowing down as a whole. While there are some early signs of a slowdown in Germany the situation in UK is quite normal. But we feel that our existing clients and businesses should take us through.

EQTM: How do you see the sector performing over the next two years and where do you see the opportunities?

Mr Desai: We have not as yet scratched the surface of US companies in terms of their IT budgets. There is a long way to go in terms of penetrating the US markets in the software and outsourcing business. Number two is that there are a lot new markets like Europe and Japan that do not have as much awareness and acceptability of the Indian outsourcing business. That is an opportunity in terms of expansion. Mastek specifically has been focusing on domain expertise in an effort to move up the value chain. Also, we have been looking at alliances and acquisitions.

EQTM: Are any alliances or acquisitions coming up this year?

Mr Desai: We have not decided anything time wise. However, we are actively looking at the acquisitions arena. We have been seeing many prospects. We want to be very clear whether the prospect fits into our strategy or not. But I can only say that we are much more ready than three months ago in terms of what we could do, as a lot of background work has been done.

EQTM: Mastek was having some problems with its operations in the US. How are those things coming along?

Mr Desai: US operations look much better than they did six months ago. We are focusing there and are getting a few offshore outsourcing for large customers. We have opened many more accounts. Of course, all of it is not reflected in the revenues. Key indicators are improving.

EQTM: Please tell us about the new clients added in the last quarter?

Mr Desai: Clients were added from all around US and the Europe. Quite a few are for offshore development. However, some of them want projects to be executed onsite.

EQTM: The finance vertical seems to be dominating your portfolio? What are the other verticals you plan to concentrate on?

Mr Desai: We have some work in the area of telecom and some Government projects in areas like education.

EQTM: Do you see any problems from telecom segment?

Mr Desai: The segment in slowing a bit, but our work is mostly with the telecom service providers. But I agree, overall there is a bit of challenge in the segment.

EQTM: Please tell us about three people who have influenced you the most.

Mr Desai: Different kinds of people have influenced me. In terms of entrepreneurship and industry builders I have been quite influenced by Matsushita. Then of course, there is Peter Drucker for his intellectual abilities. In terms of spirituality J. Krishnamurti has influenced me a lot.

EQTM: Any favourite books...

Mr Desai: All three have written books by the way. I read C. K. Prahalad quite often. I have found Peter Drucker's 'Management' and Matsushita 'Not for bread alone' to be quite interesting.

EQTM: Where do you see Mastek five years from now?

Mr Desai: I see Mastek as a leader in the services sectors, adding value for its customers. The employees will find it the best place to work, where their careers will get developed. We will also work with the goal that our shareholders get rewarded.

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