As a company active as an IT solutions provider specializing in cloud and cognitive services, Mphasis had to embrace both the headwinds and tailwinds that came across this industry this year.
While large IT majors were not left unscathed by the sharp impact of overall industry setbacks, midcap companies bore the brunt of the spillovers too – whether it was client problems or the strong surge of breakthroughs that are redefining business offerings.
This was corroborated when Mphasis showed a 4.5 percent sequential fall in revenue in constant currency (CC) terms for Q4FY23. According to industry watchers, the revenue dip could be blamed on the mortgage business in the DXC segment, (shaken by rising interest rates and sluggish US home sales). There was also weakness seen in the Direct International segment with a sluggish Q4 performance – thanks to delayed project ramp-ups, and the banking and insurance business woes.
Srikumar Ramanathan, Chief Solutions Officer, Mphasis
“Generative AI technology has become a catalyst for enterprises to drive creativity and efficiency in a rapidly evolving technology landscape. With its ability to generate novel ideas and solutions, Mphasis.ai will empower companies to break free from the confines of conventional thinking, enabling them to differentiate themselves in the fiercely competitive market. We eagerly look forward to partnering with our clients and partners to redefine intelligence, while businesses remain resolute in their pursuit of ensuring responsible and sustainable growth for the future.”
For now, it is anticipated that it will see a soft start to Q1FY24 – with a recovery from Q2 onwards. Notably, Mphasis posted a net profit of `405.3 crores for the March quarter, a plunge of 1.7 percent from a net profit of `412.2 crores (for the preceding quarter of FY23). Its revenue for the last quarter of FY23 was at `3,361 crores – a dive of 4.1 percent from the revenue for the preceding quarter that was at `3,506 crores. For the full financial year, the revenue was `13,798 crores, up by 15.5 percent from the revenue of `11,961 crores in FY22. Its net profit went up 14.5 percent to `1,638 crores in FY23.
The two faces of BFSI and Talent
Incidentally, the company claimed it has steered clear of the banking fiasco in the US region. It went ahead and announced that it has no exposure to Silicon Valley Bank, Signature Bank, or Silvergate Capital, either as a client or as a banker. “We are continuing to focus on servicing our clients in this heightened environment of volatility and transaction volumes. Mphasis has no business with or exposure to Silicon Valley Bank, Signature Bank or Silvergate Capital, either as a client or banker. Our business from US regional banks is a low single-digit percentage contribution to the overall revenue.” As explained by Nitin Rakesh, Chief Executive Officer, and Managing Director, Mphasis.
In many analyst calls, he also clarified that the overall company pipeline was doing good at a year-on-year level, especially in non-BFSI segments. Another promising sign, as he added, was that of a good level of deal conversions—complemented with deal closures in the BFSI segment. Apparently, there is strong growth from old and new clients and from the verticals, the company has invested in over the last three years—like healthcare, travel, and high-tech/TMT business.
Interestingly, the company also added to its talent pool in a year turbulent with layoffs. It announced the creation of 1,000 new jobs in West Yorkshire in October 2022. The further investment in the region builds on Mphasis’ creation of a UK center of excellence in Leeds for their insurance clients in 2021. In May 2022, it announced plans to recruit up to 600 employees for its Guadalajara operations in the coming year. These were related to areas like application development and infrastructure management (including telecoms and networking), end user, and help desk support – cementing Mexico as a global technology hub.
Key Wins and Partnerships
• Has partnered with several Hyperscalers such as AWS, Google Cloud Platform (GCP) and Microsoft Azure
• Collaborated with specialised market-leading AI platforms and solutions companies such as Kore.ai (Gartner Leader in Conversational AI platforms) and Databricks
• Its partnership with Kore.ai, will create strong collaborations that enhance the integration, implementation, development of solutions, and engineering of top-notch AI solutions. This coming together with the enterprise conversational AI platform Kore.ai will also improve its contact centre offerings
• Has forged a strategic partnership with Securonix to tap Securonix’s analytics-driven detection and automated response tools and Mphasis’ Digital & Cyber Defense expertise, to provide future-ready Cyber Threat Monitoring and Response services to enterprises, and government agencies globally
Plan B is now Plan A
Understandably, the company is underlining technologies that are just emerging on the horizon. Like quantum computing. It has forged an alliance with the Indian Institute of Technology Madras through an MoU to create a hub for quantum science and technology. The aim is multi-fold—to produce top-quality graduates, to promote fundamental and applied research in quantum technologies, to democratise access to education in quantum technologies, to assist startups aligned to relevant domains, and to develop and attract talent to the quantum ecosystem by offering a limited number of high-value top-up scholarships to students who excel in research. It intends to support higher education and students whose research in quantum science and specific quantum architectures will be recognized and have a significant societal impact.
In June 2022, it also joined the Government of Alberta and the University of Calgary for the launch of the world-leading Quantum City – Canada. This partnership will include assessment, consulting, and joint development of quantum computing solutions along with exploring possible industry solutions in the areas of Machine Learning, optimization, simulation, and cryptography, among others. This Quantum City will cultivate a national network of researchers, spur economic, technological, and infrastructural development, and act as a focal point for attracting talent through high-quality mentoring, training, and skills development in the country. The center, as explained in the announcement, will focus on developing cutting-edge solutions, collaborations, and skill-building initiatives in crucial areas of research such as Health, Energy, Environment, Agriculture & Food, Clean Tech, Oil & Gas, Social Sciences, Space, Finance, Logistics, and Transportation, etc.
Nitin Rakesh, CEO and MD, Mphasis
“The macro-economic environment remains uncertain while we continue to look for aligning with our client’s current priorities. Strategic technology spends may have slowed down, however, hasn’t been paused.”
“Conversational AIsolutions are leading the way in which enterprise clients are interacting with their end customers.”
Next up on the dartboard, is a firm push in the space of AI.
Mphasis has recently thrown its own AI hat in the ring by launching ‘Mphasis.ai’, a business unit for integrating AI capabilities into existing technology landscapes, enabling organizations to improve customer intimacy and experience and enhance operational efficiency while minimizing disruption.
This AI gamut covers offerings that drive business outcomes, starting with AI Advisory to help assess and identify key AI interventions to complete archetypes such as contact center transformation, customer experience transformation, etc. It also covers access to an array of patented AI assets, over 250 models available on Hyperscaler marketplaces, and frameworks created at Mphasis Next Labs (an in-house research and innovation lab). It will also entail access to Conversational AI platforms, powered by generative AI technology, and large language models (LLMs) to transform customer experience management and employee engagement for businesses. The Mphasis Sparkle Innovation Ecosystem has enrolled over 50 domain-specific start-ups (including AI-focused) that can accelerate the co-creation of robust go-to-market solutions for enterprises.
Well, no matter which way the winds blow, when a company has put the right sails in place, it can count on staying safe from storms and also on being lightning-fast with the shores that matter.
By Pratima H