Full annual report of 2011-2012 - Mindtree

programs to cater for this. Our plans to set up a world class training facility in Bhubaneswar will further strengthen our ability to increase campus
intake & make them ready for projects faster.
In order to create a differentiated culture and preferred place to work, we have taken multiple steps. These include transparent evaluation
criteria, continuous focus on training and new skills, competitive compensation packages, being a value-based organization, open
communications policies and ability to prepare our people for leadership roles.
Knowledge Management and Innovation: We leverage on effective knowledge management techniques through a well-planned knowledge
ecosystem to nurture, share and tap knowledge. We view innovation and knowledge creation as a key strength that is and will continue to help us
deliver value to our customers. This focus of ours has also resulted in our receiving industry recognitions. MindTree was featured as Asian Most
Admired Knowledge Enterprise (MAKE) winner for the fourth consecutive year in 2011, instituted by Teleos in association with The KNOW Network.
We also won the Global MAKE award for the second year in a row in 2011 and ranked second in the Indian MAKE award. MindTree bagged the
NASSCOM IT User award 2012 under ‘Social Media Adoption in an Enterprise’ category for its intranet application called ‘PeopleHub’.
Corporate Governance & Senior Leadership: We have an unrelenting focus on Corporate Governance and we continuously raise the bar on
corporate governance standards. MindTree was awarded “Best Corporate Governance, India, 2012” by World Finance magazine and ranked third
in India in the “Best overall for Corporate Governance” category in Asiamoney Corporate Governance Poll, 2011. Besides, our management team
has enormous global experience in the IT industry. Our management team has come from diverse backgrounds and geographies and with different
areas of specialization within the IT industry. With the help of experts in the area of leadership assessment, a comprehensive assessment of our
leadership team has been carried out to prepare our teams for greater roles and responsibilities. This transition has necessitated some changes
and we have worked on them with speed and empathy.
In 2011, our MD and CEO, Krishnakumar Natarajan was awarded the CEO of the year (Emerging Companies Category) by Bloomberg UTV.
Threats, Risks & Concerns
Uncertain economic environment in leading economies like the US and Europe can impact demand for IT services: The overall business
environment is a little uncertain given the macro economic issues in the US and Europe. The recent prediction by industry body NASSCOM of
lowered growth expectation of 11-14% in FY13 for the Indian IT services Industry also kind of supports this view. One view of the economic situation
is that given the low economic growth which is likely in the US and Europe, companies in these countries will look to outsource more to get higher
business benefits with lower spends.
Legislation in existing markets could restrict companies to outsource: With about 58% of our revenues from US, any restrictions on outsourcing
services and Visa’s by US government negatively impacts our business. One example of this is, in recent times the rejection rates for L1 visa
petitions, which are used for intra-company transfers of employees from foreign offices to US offices has gone up. Between 2005 and 2007, the
denial rate for L-1 petitions ranged from 6 to 7%, in 2008 it rose to 22% and reached 27% in 2011. While this will not impact our business in a major
way, any other substantive anti-outsourcing legislation may hurt our prospects.
Pressure on pricing: In a highly competitive environment, customers have tough expectations on pricing. We are focusing on providing higher
value and differentiated services to beat the pricing pressures. Our strategy in the past 12 months and going forward is centered on doing more
with less and building deep domain expertise in our chosen areas. This approach should help us limit pressures on pricing.
Competition: To improve operational efficiency and market addressability we made changes to our organization structure about 12 months ago to
keep it simpler and efficient. The focus also is to be in fewer domains and take a lead in many of them. We have two business units to address the
market – IT services and Product Engineering Services (PES). With a view to provide end to end data & analytics services to customers, Data
Warehousing and Business Intelligence practice and Knowledge Services was combined to form Data & Analytics Solutions (DAS). DAS became the
third arm of our growth enablers – the other two being IMTS and Testing – to help ITS and PES drive higher growth. The market for all these areas is
highly competitive and rapidly evolving. We primarily face competition from Indian as well as international companies and captive offshore
centers. Our mature global delivery model, range of services offered, our level of technical expertise and talented pool of people and our culture
help differentiate us from some of our competitors. We have also expanded our global delivery model by establishing a dedicated development
center in the US; we will be able to offer follow-the-sun delivery in collaboration with our teams in India, same time-zone support, as well as other
local services to our clients. We believe that price alone is not a sustainable competitive advantage in an environment where IT and technology is
becoming increasingly critical to our client's core corporate strategy. We have therefore endeavored to develop competitive strength through our
ability to provide personalized and differentiated service to our clients. Through the help of experts in the field of branding, we are also currently
working on rebranding initiatives to reflect MindTree’s new strategy and focus on the market.
Talent acquisition: Our success depends in large part upon our highly skilled software professionals and our ability to attract and retain such
personnel. Due to the limited pool of available skilled personnel, we face strong competition to recruit and retain skilled and professionally
qualified staff. Our talent acquisition philosophy is to recruit for attitude, train for skill and develop for leadership roles. We follow a role-based
selection process and place high emphasis on cultural fit of the prospective staff members with our organizational values. We have a robust
process to evaluate needs and acquire talent in tune with our business needs. Our talent acquisition is driven by the annual business plan (covering
number of people needed by location and their levels and roles in the organization), which is monitored and continually adjusted based on
business visibility on a monthly basis. We are also expanding our locational presence to tap the talent pools in newer cities.
Foreign currency rate fluctuations: A major portion of our revenues are in foreign currencies and a significant portion of our expenses are in
Indian Rupees. The exchange rate between the Rupee and the U.S. Dollar as well as other currencies has been very volatile in recent years and may
continue similarly in future. Our operating results are impacted by fluctuations in the exchange rate between the Indian Rupee and the U.S. Dollar
and other foreign currencies. Judiciously hedging against adverse foreign exchange exposures help in minimizing the impact of exchange
fluctuations. We continue to maintain a prudent and balanced forex management policy which we expect will help us manage this risk
appropriately.
Unstable law and order situation: Recent Government assessments indicate that the software industry could be a soft target for a terrorist
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