This growth is driven by vendor consolidation and investments in areas of digital such as cloud, data and analytics.
Mid-tier IT firm Mphasis expects to see positive sequential growth from the second quarter - driven by vendor consolidation and investments in digital, said CEO Nitin Rakesh.
Rakesh said, “We expect to end the year with a positive growth territory.”
In addition to digital, this growth will also be aided by the company’s portfolio that are diversified and are in areas that are less stressed, he added.
The company’s net revenue declined 2.5 percent sequentially for the quarter ending June 2020 to Rs 2288 crore. It grew 10.9 percent on a year-on-year (YoY) basis. The net profit decreased 22.1 percent sequentially to Rs 275 crore for the June quarter.
A third of the company’s revenues from banking and capital markets. It accounted for about Rs 1124 crore, a growth of 4.9 percent sequentially and grew 22.1 percent year-on-year. However its other sectors such as insurance, information and technology and communication and entertainment saw a decline of close to 5 percent.
Nitin Rakesh, CEO, Mphasis. Source: Special Arrangement
According to Rakesh, the decline has primarily come at the back of COVID-19. While the investments are coming in, banks are dealing with bad loans and have to account for the economic crisis due to pandemic. Companies are cutting down on IT spending and are cautious about investments.
At the same time, Rakesh explained, companies have also realised that technology investments are necessary to cut down cost in the long term.
“There is no growth for legacy right now,” he pointed out.
Rakesh explained that banks are investing in digital payments and contactless banking solutions at the back of COVID-19.
The company won new deals with a total contract value of $259 million in the first quarter with 79 percent of the deal wins in new generation services. This includes investments in the areas of customer experience, migration to cloud, cybersecurity, workplace modernisation and data and data analytics.
Some of these deals include vendor consolidation that the company benefited from.
With the demand for digital, the company is looking at hiring both freshers and laterals, though Rakesh did not share the number. In terms of work from home (WFH), the company is looking at a large number of its employees WFH for the next 2-3 quarters. Currently, less than 10 percent of its employees are working out of offices. The company employs 26,143.