managing in difficult times jan09 by krishnakumar n mindtree
DESCRIPTION
The eighth meeting of the NASSCOM Noida CEO Forum. The general mood these days is of distinct uncertainty. How long? When etc. Will it be over in Q1, Q2 or simply which of the Q’s? After all, how long can you run business by simply “crystal gazing”. We decided to reach out to our members by engaging Mr Krishnakumar Natarajan, CEO, MindTree Ltd, to come and share with us his experience in “Managing a downturn”. “Managing a downturn”. Is it a strategic issue? Yes. Marketing? Surely. Finance? Has to be. Operations? why not? and most definitely HR.To shape our business for future, we must embark upon a strategy, which focuses upon simultaneous activity in protecting volumes, reducing costs and increasing prices. Fundamental proposition, you may think, but when you conceive this idea in the context of a sagging economy, not just locally but even more so globally, does the realization hit you. The way we do business needs to change radically, where mere survival seems a challenge at times.TRANSCRIPT
© 2008 MindTree Consulting© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Managing/Leading in Difficult timesJan 2009
M1M2
Slide 1
M1 MindTree, 1/5/2009
M2 MindTree, 1/5/2009
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Outsourced services Market-A perspective
lIndian IT services Market performance ( 1998-2008)
l 8% of incremental GDP growth.
l18% of incremental exports/16% of total exports.
l $40.5B exports expected to grow 15-18% this year.
l Headroom available for continued growth.lNew Services ( IMTS/KPO etc)
lNew Business Models.
lWe are addressing a market which will be $1.2 trillion by 2020.
lExciting opportunities for growth and success for well managed companies.
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Plan or not Plan
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Current Financial crisis
l Impacting broad set of businesses leading to a tight credit crisis.
lConfidence of investors low.
lRecession trends visible in various markets.
lOur assessment is that the process of rebuilding will be 12-18 months.
lSigns of recovery later half of 2009.
lWhat are you hearing in your markets/with customers?
lWhat is it that we are hearing from customers on IT budgets?
l Flat
lCut 5-10%
lIncrease 5-10%
lIncrease > 10%
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Strategy Implications
lFocus on strategic & scalable markets & customers (dropping some)
lNeed to relook at practices/Industry groups/products with sub scale operations.
lRelook at customer profile.
l Industry growth likely to be <10% and you must grow atleast 25% ahead of Industry.
l Investment into emerging businesses
lContinue investments into emerging markets.
lNeed to build a business model to deliver current services at Asian cost levels.
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Strategy Implications and Key Levers
Current Financial
Crisis
Customer focus-Deepen
engagements
Focus on receivables
Delivery excellence-
Value addition
Cost removal-
Operational excellence
© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only
Areas for Focus
l Expand into APAC (include India) as a key market.
l Asia expected to be 20% of World GDP.
l India market $120-130B by 2020.
l Address new market segments.
l Energy &Utilities/ Govt./Healthcare in IT services.
l Healthcare/Defence in Prod Engg services.
l Evaluate opportunities in SMB segment.
l Business model and Value proposition critical.
l Spending in IT expected to increase 7% CAGR . $250B market.
l Investment in Frameworks & reusable components.
l Communicate-Communicate- Balance realism and optimism
l Innovate- New problems… New solutions
l Reevaluate people/compensation structures
© 2008 MindTree Consulting© 2009 MindTree LimitedCONFIDENTIAL: For limited circulation only © 2009 MindTree Limited
Imagination Action JoyImagination Action Joy
Krishnakumar Natarajan