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May 13, 2006

Will MindTree make it big?

Business Today has an article on MindTree Consulting, the VC-backed IT services company founded in 1999 by Wipro alumni, in the context of its revenues (for 2005-06) crossing $100 million is one of the youngest Indian it companies to do so makes its feat even more impressive. The Big Three of Indian IT-TCS, Wipro and Infosys-had taken 29, 18 and 17 years, respectively, to reach this landmark...

...But TCS, Wipro and Infosys have revenues of about a couple of billion dollars (Rs 9,000 crore) and headcounts of 50,000-plus employees each. Can the relatively puny MindTree, with 3,200 employees, stand up to its bigger rivals?

...MindTree's net operating margins are believed to be significantly lower than those of the Big Three. The company, however, refuses to share these figures with BT, citing its status as a privately held one. "Yes, we are not in the high teens, but we are looking at increasing them," says Ashok Soota, Chairman and MD, MindTree. The industry average is 21 per cent for Tier-I players. Its topline, though impressive, also needs some qualification. It reached the $100-million landmark a year behind schedule, and fell short of projections by $21 million (Rs 94.5 crore) when it did. This is because the dotcom bust hit the fledgling company harder than most others as 75 per cent of its revenues came from dotcom-related businesses. Since then, of course, it has rallied around and diversified its offerings and customer base.

Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.