Mid-sized IT services exporter Mphasis on Thursday reported a 14 percent year-on-year (YoY) jump in consolidated net profit at Rs 341.4 crore for the quarter ended in September 2021. In the corresponding quarter last year, the company posted a net profit of Rs 339.6 crore. Its revenue from operations was up 18 percent to Rs 2,869 crore during the quarter under review as against Rs 2,435.4 crore in the corresponding period of the last fiscal. In an interview with CNBC-TV18, Nitin Rakesh, Managing Director and Executive Director at Mphasis, discussed the company’s outlook and the ongoing attrition woes that the industry is grappling with.

On Q2 earnings, he said, “We have had pretty broad-based growth in the direct business. 6 percent of revenue in Q2FY22 was what we had guided, very strong momentum, broad-based growth coming from all geographies, all verticals and applications and transformation driving that growth as well, so quite comfortable that we should be able to sustain this growth in the direct business.”

The adjusted margin for the M&A expenses is at 15.8 percent, which is almost flat.

“We feel confident that at the operating level we can sustain this level of EBIT in the business,” he said.

According to him, this is a conducive environment for pricing.

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Rakesh believes the industry is in the early stages of a tech investment super cycle.

“We are quite comfortable with the fact that we have been able to generate enough pipeline and demand with the customers and the business. It is a pretty conducive tailwinded demand environment. It is definitely an opportunity to continue to accelerate the overall company growth while maintaining the market leading growth on the direct business,” he said.

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Mphasis has recently acquired Blink Interactive for around USD 100 million. The company has an opportunity to expand its targeted addressable market starting with design, research and then experience. “That gives us the ability to go after spend that is traditionally not seen in the IT services space but comes more from the business product side, marketing side,” he said.

The company will continue to look for opportunities to expand capability, competency and continue to focus on the expansion of the addressable market.

“We will continue to look for opportunities on a pretty sustained basis. This was our second acquisition in the last 12 months. With Blink we have also got a set of 10 fortune 500 names that were not in the mix for us before,” he explained.

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On attrition, Rakesh said, “Attrition in the industry is as much a headwind as it is a tailwind for us. The ability to hire is only one part of the equation, the ability to create net new talent is what differentiates a good business from the others. Our focus has always been on whether we can create net new talent in every geography that we are operating in, so it is definitely a constraint in the supply environment.”

The company has a very robust talent reskilling platform called Talent Next, which is hiring at every level of its supply chain from a pyramid perspective.

“More hiring at the fresher levels- we continue to focus on more upskilling and cross-skilling and expansion of new supply chain engines coming out of other parts of the world as well,” he said.

“We have basically used almost all levers of supply chain. We have called out for the fact that we have expanded our supply chain into near markets, near geographies. We have set up centres in UK and Germany as well. That is one part of the expansion, the second part is talent reskilling,” Rakesh mentioned.

For the full interview, watch the accompanying video.

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(Edited by : Dipikka Ghosh)