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B
ack in 2010, MphasiS was los-
ing market relevance. Instead
of focusing on niche markets
and going deep, the company had a
diverse portfolio covering eight ver-
ticals, a sales force spread across 16
countries, and a heavy dependence
on business from Hewlett-Packard
(HP), its controlling shareholder since
May 2008. In effect, MphasiS was
betting that with its broad offerings
and widespread geographical reach,
it would be more competitive and
increase its market signicance. It
was wrong.
The strategy didnt work as
expected. MphasiS was quickly los-
ing ground to competitors and it
faced steep decline in a majority of
its business areas. Says Ganesh Ayyar,
CEO, MphasiS, This is when we made
a few choices. The rst was to grow
our direct business more than what
we had done in the past four years.
The second decision MphasiS took
was to rely less on the so-called off-
shore model, which banks heavily
on cost arbitrage to win overseas con-
tracts. While this is important, it is
not sustainable for future growth,
he emphasises. In effect, rather than
casting the net wide, we decided to
do spear-shing. We wanted to know
which sh we want and to have the
right spear for it.
Ayyar, 52, is transforming the
business not by taking on more risk,
but by refocusing on select indus-
tries where it has core strengths.
Instead of going after every
market segment, MphasiS ulti-
mately had to pick on domains
to show off what it could really do
in select verticals. The company is
betting heavily on banking and cap-
ital markets and insurance segments
where it will raise its investments.
When we looked at the amount of
creditable work we had done in these
areas, we wanted to make them our
focus areas, says Ayyar. He adds that
although MphasiS would be serving
clients outside these dened domains,
they would not be making any inor-
ganic acquisitions or pumping new
investments in those spheres.
The banking, nancial services and
insurance sectors in emerging markets
are burgeoning with increased spend-
ing in areas of core system acquisition
by insurers and asset managers in par-
ticular, explains Kalpesh Desai, CEO,
Agile Financial Technologies. There-
fore, these sectors will continually
invest to ensure effective systems and
processes are in place. As a result, this
will lead to increased activity in tech-
nology deployment and ancillary ser-
vices, he opines.
Sitting in a conference room in
his Bagmane Laurel ofce, Banga-
lore, the companys corporate ofce,
Ayyar condes that he was not wor-
ried when he agreed to take over as
CEO in 2009 to transform MphasiS.
He inherited, among other things, a
company that lacked strategic vision
and a business model that was not
able to compete but relied largely
on business from HP. His decision to
de-emphasize the HP business was
Ayyar:
no fear of
failure
A reinvented
MphasiS is
ready to return
to significance
Back in the game
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surprising considering he was a 24
year veteran of HP. I am a rst time
CEO, so I have no baggage but only
an upside, admits Ayyar. Every step
I took has been a step of learning. I
have had the advantage of challeng-
ing the status quo. In effect, I have
no fear of failure because I was pre-
pared for anything. All said, he
so intensely enjoys his job that he
admits, I would not like to trade it
for anything else. Still, at a personal
level, it has been a transformation for
him from a manager to a leader.
Apparently doing one thing well
is sufcient, at least for now. Recov-
ering from the malaise of spreading
itself thin across numerous domain
offerings, Mphasis rode past expec-
tations when it reported an increase
in revenues for the third quarter
ending July 2013 at `1,540 crore,
up by 9.6 per cent q-o-q. Its net
prot stood at `193 crore, up 9.1
per cent q-o-q. The nancial year at
MphasiS runs from 1 November to
31 October.
A new beginning
MphasiS has been a mid-size soft-
ware solutions player that specialises
in providing a suite of application
development and maintenance ser-
vices, infrastructure outsourcing
services and business process out-
sourcing solutions to clients world-
wide. In addition to banking and
capital markets and insurance sec-
tor, other verticals it caters to include
healthcare & life sciences, transpor-
tation & logistics, retail & consumer
packaged goods, communications,
media & entertainment, energy &
utilities and manufacturing. With
37,000 employees, MphasiS has 63
ofces worldwide.
MphasiS Corporation was founded
in 1998 in California, USA, by Jerry
Rao, a banker, having worked with
Citi and its parent Citicorp in var-
ious capacities in different conti-
nents. After MphasiS Corporation
merged in 2000 with a then mid-
size Indian IT services rm, BFL Soft-
ware Limited, MphasiS Limited was
formed in the same year. In 2006,
Electronic Data Systems (EDS) pur-
chased a controlling stake in Mpha-
siS for $380 million and it operated
as an independent entity of EDS. The
acquisition made sense for EDS, to
complement its own applications,
add ITO expertise, and complete
the portfolio with BPO. In 2008, HP
reached a deal to acquire a major
stake in EDS for $13.9 billion. Not let-
ting its huge holding inuence the
companys strategy, HP lets MphasiS
operate as an independent subsid-
iary with an independent board and
management team.
Going deeper, not broader
In embracing prudence at the right
time, Ayyar skilfully guided MphasiS
back to relevance by refocusing and
restructuring its global markets that
had crippled its growth. Initially,
we reduced the number of coun-
tries where our sales force was spread
from 16 to 8 in 2011 and narrowed
our investments from eight verticals
to two, he explains. In 2013, this
strategy was further altered, and the
number of countries MpahasiS was
going after was brought down from
8 to 3. Now, MphasiS has dened its
world markets into mature markets
(with ve countries including Ameri-
cas, UK & Europe, Australia and New
Zealand) and emerging markets (with
three countries viz. India, Sri Lanka,
and Indonesia). The idea is to con-
centrate our efforts and become a
force to reckon with, declares Ayyar.
All said, MphasiS is once again on a
strong trajectory for growth.
MphasiS is generally mum about
details of all sorts, including its pro-
jected earnings; that reticent cul-
ture clearly starts at the top. Ayyar
wont conrm whether HP is selling
all or part of its 60.5 per cent stake
as reported in the market, or what
are the companys revenue targets,
or what will be the ratio of its direct
sales compared to business from HP.
Far from speculating expected rev-
enue for this year, Ayyar states, The
only way to measure your future is by
asking if you have become more rel-
evant to your customers, and if you
are able to work with them in their
thinking process in terms of their
priority areas, then that is what mat-
ters most. But analysts think Mpha-
siS may record growth of around 8 to
10 per cent over its consolidated rev-
enue of `5,357 crore in FY12, which
will make it one of the largest in Tier
II IT companies by sales.
MphasiS is moving out of its com-
fort zone in many ways. For one thing,
it is changing the business component
it relied on. Business from HP domi-
nated a signicant 62 per cent of its
revenue in 2011 and direct sales were
38 per cent. That is changing and the
company is reducing its reliance on
HP and balancing its client concen-
tration risk. The business from HP, on
an average, has been declining by 5-6
per cent every year. Today, the busi-
ness mix stands at 54 per cent from
direct sales vis-a-vis 46 per cent from
HP in Q2 2013. The same was 48:52 in
Q1-2013. Overall, our direct business
grew 38 per cent in 2012, compared
to 22 per cent in 2011, says Ayyar.
Describing Ayyar as a highly data
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Elango: empowering employee and customer
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driven man, Dinesh Venugopal, exec-
utive vice president & head, banking
& capital markets, says, Ayyar starts
with data and numbers to understand
any business problem. He adds, this
is especially true when benchmark-
ing our company performance with
that of our competitors it is nothing
short of unique and effective.
Investing in people
But Ayyar isnt just focusing on busi-
ness transformation. He has put
major emphasis on talent acquisi-
tion, knowledge and training. We
have quadrupled our training budget
simply because we wanted to ensure
our people were learning new tech-
nology to bring the benets to our
customers, he stresses. One particu-
lar program for its sales force called,
First Line Managers (FLMs), ensures
the company does not lose sight of
the customer. In effect, what each
manager does and achieves every day
will dene our moment of truth,
he adds. There are around 3,000
FLMs and this program has helped
the company raise customer satis-
faction. Our FLM initiative moved
the empowerment closest to the
employee and the customer, admits
Elango R, executive vice president &
chief human resource ofcer.
MphasiS has also started a Future
Leader Program since 2011 to build a
team of potential leaders to run the
companys strategic operations. We
go to business schools in India and
the US and hire about 20 candidates
every year and they are put through
an intensive 24-month program in
8-month modules in different areas of
the companys operations, explains
Ayyar. The program for instance,
attaches the potential leaders to key
areas of CFOs ofce, global delivery
leaders, sales leaders and some in
their US operational areas. We want
such people to challenge our status
quo and bring in new thoughts and
ideas, he asserts.
Ayyars collaborative style may, in
fact, be better suited to todays con-
temporary business environment
than the traditional command-and-
control approach. I think the young
generation today is very aware and
know a lot, he thinks. In fact, he
likes employees pitching new ideas; a
way of focusing their minds on what
will most excite customers. Ayyar
is a leader who is a coach, taskmas-
ter and biggest supporter, concedes
Elango. He sets the framework and
sets you free to deliver results. For
him, results are what counts.
Ayyar was born and grew up in
the 1960s in Madhya Pradesh. His
father worked as principal of a poly-
technic institution. Both his par-
ents came from south India. Ayyar
did his entire school education in
Hindi, which was rare for a boy from
the south. He learnt English only as
a secondary language. As fondly he
remembers the school days, Ayyar
says, I am very proud of my Hindi
schooling as it helped me in build-
ing lateral thinking. He then qual-
ied as a chartered accountant. Still,
he got so fascinated with the eld of
information technology that he got
into computer sales and gave up his
career in nance.
Ayyar and his wife of 30 years
have two daughters, both of who
live in the US. Ayyar has homes in
Bangalore and Singapore. His wife
lives in Singapore but visits him in
Bangalore every few weeks. At home
in Bangalore, he has two dogs to keep
him company.
When a group of CAs invited
Ayyar to deliver a talk, they wanted
to learn about his lesser known per-
sonal traits. Taking them up on that,
Ayyar said, he still carries a straw in
his wallet, which was used by his girl-
friend, now his wife, to have a drink
on their rst date three decades ago.
Clearly, it speaks of his commitment
and loyalty.
As a chartered accountant, Ayyar
has a deep understanding of accounts
and uses this well with his sales skills.
States Elango, he looks at numbers
very differently, has immense humil-
ity and the patience to listen. All
said, Ayyar likes to tell the story and
the lesson he learnt from a mistake
made when placing a sales order for
a large system during his early days
at HP Singapore. Conguring those
systems involved a lot of paper work
and in placing one order I forgot to
mention that it required a Singapore
power option, he explains.
The system landed with a US
power option and this meant losing
time and money in placing a new
requirement. Ayyar quickly placed
an order for another power option
to be hot-shipped without wait-
ing for his boss approval. His quick
action not only earned him his supe-
riors approval but taught him a big
lesson. My boss was patient and
understanding. How he dealt with
me became etched in my memory as
these moments are truly teachable
moments in life. I also realised that
HP stands committed to its customer
at any cost, he opines.
Planning for future
Ayyars transformation plan did not
keep the company from making new
acquisitions. In 2011, MphasiS pur-
chased Wyde Corporation that devel-
ops and deploys Wynsure, a proven
software platform for insurance car-
riers in North America and Europe.
Wynsure architecture allows insur-
ers to make unique enhancements
to the system without affecting the
base code, thereby creating a simpler
Dhanyamraju: setting the pace
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upgrade experience for insurers.
Billing is a xed cost. With Wyn-
sure, our effort is to make it variable,
exible and cloud enabled, explains
Ayyar. A customer will gain by pay-
ing only a per bill charge for using
the solution and would thereby save
investment cost in the platform. The
addition of MphasiS-Wyde Centers
of Excellence is expected to help the
Wynsure development team meet
the demands of new and existing
customers.
Another acquisition in early 2013
is that of Digital Risk, an indepen-
dent provider of risk, compliance and
transaction management solutions
that complements the companys
portfolio in US residential mort-
gages. It offers a superior level of
specialisation where they have great
skills, says Ayyar. It is an analytics
platform to analyse the risk associ-
ated with it. With analytics gaining
market credibility, Ayyar feels, this
acquisition will help MphasiS attain
leadership position in the US mort-
gage services market.
All said, Ayyar knew that Mpha-
siS future depended on his ability
to change the company from a mere
HP owned rm to a provider of soft-
ware and services. Customers are
looking for more than reputation,
now they are seeking solutions that
meet their requirements and help
them stay on top of their business,
he emphasises.
Ayyar has a lesser known trait
that may serve him well amid the
tumult of todays competitive soft-
ware business: not to give up eas-
ily. A 24-year veteran of the HP and
MphasiS, Ayyar joined HP Singapore
in 1989, where he focused on the
manufacturing industry. In 1991, he
was at the centre of the HP initiative
focusing on the telecommunications
industry. His efforts led him to hold
a key role in the manufacturing and
telecom team in 1992. In 1999, Ayyar
became the president of HP India. He
steadily rose to become Asia-Pacic
director of marketing in 2001. He
took over as CEO & managing direc-
tor of MphasiS in 2009.
Ayyar is maintaining, by words
and actions most of HPs unique cor-
porate culture. He candidly admits,
my work culture and philosophy is
based on the HP way of life in many
ways. HP fundamentally believes in
people having potential. As a man-
ager, your role is to enable them,
as your success eventually depends
on them. As a leader, Ayyar is con-
stantly setting the pace and ensur-
ing his team keeps pace with it,
explains Seshagiri Dhanyamraju,
executive vice president & chief
strategy & marketing ofcer, about
his management style. He is a learn-
ing leader, forcing himself and oth-
ers around him to continually learn
new skills.
MphasiS strives to maintain its
independence and takes its own stra-
tegic decisions. The fact that we
have made inorganic acquisitions to
strengthen our offerings is sufcient
to conrm that we operate as a sepa-
rate entity, urges Ayyar. He may be
very composed, but hes anything
but boring. He travels a lot, loves col-
lecting wrist watches and artefacts.
One of his passions is reading man-
agement books.
Ayyar says his father played a
powerful role in his life. His father
pursued his masters degree when he
was in his 40s. It was amazing how
someone at that age can pursue their
interests, he says. He was the role
model who helped me build persis-
tence and will power.
Poised for next leap
Ayyar says it is hard to gure out
todays evolving technology changes.
If you look at trends, the economic
cycles are getting compressed. The
boom to bust cycles are getting
shorter. Around a decade ago, we
could see the cycle. Now you dont
know in which cycle you are in the
boom or bust phase, he states. But
he adds that a company must be alert
at all times and respond to changes
to serve the needs of its customers.
According to Elango, after the trans-
formation, MphasiS has established
strong operational processes with
a nimble strategic unit that is able
to respond to the market demands
ahead of changes. Ayyars turn-
around of MphasiS has earned him
many accolades.
The biggest threat to MphasiS
isnt rival Indian software rms, but
largely unknown and unheard of
boutique rms, who pose the major
challenge. If you look at the soft-
ware services business, you will rea-
lise that the next generation players
are threatening the pecking order of
the industry, explains Ayyar. To
that extent, being large becomes a
disadvantage. Your ability to act and
react becomes difcult.
Still, if such competition worries
Ayyar, it doesnt show on his face. I
think we can transform because we
dont have too much baggage and
we are at it for three years now. So
I personally believe we have a good
chance. Ayyars transformation plan
has helped the company grow out
of its mid-size level to strive higher.
In the last ve years, we were in the
middle of the pack. In the next ve
years, we want to be in the top quad-
rant, he declares. The nal judges, of
course, will be customers. If a trans-
formed MpahsiS nds favour with
customers, MphasiS could well dom-
inate the game and be a winner.
u S H A S HI B H AGNA R I
Desai: BFSI sector continues to invest