With a view to moving away from the ‘India centric’ export oriented view to a truly ‘multinational operations’ view and a strong challenge to move up the value chain, Mastek embarked on a subsidiary model. The challenge was to bring benefit to the customer and the subsidiary models help the company in this endeavor. It facilitates the presence of a local management team which is fully empowered to take important decisions quickly and address concerns on the spot. As part of its movement up the value chain, Mastek believes that proximity to the customer is a pre-requisite for it and the subsidiary model makes this customer intimacy much easier.
In order not to lag behind in taking care of employees, Mastek believes that the subsidiary model promotes motivation among employees to work, thereby helping the company deliver high value to its customers. Another advantage is Mastek’s vision–’Think Global and Act Local’ that can be realized by attracting the best of local talent through the local business environment.
The company at present has subsidiaries in the US–Majesco Software Inc, the UK-Mastek (UK) Ltd, Singapore-Mastek Asia Pacific Pvt Ltd, Malaysia-Mastek-Software Sdn.Bhd and Germany-Mastek, GmbH. It has plans to open subsidiaries in Belgium, Switzerland and Japan. These subsidiaries are primarily financed by Mastek. The company also finances its subsidiaries by capitalizing the amount that the subsidiaries owe Mastek. Currently, more than 85% of revenues of the Mastek group is derived through its subsidiaries.
Through its wholly-owned subsidiaries, the company operates in the overseas market. The subsidiary books orders for onsite services and offshore projects and sub-contracts to Mastek. In case of onsite services, Mastek deputes its software engineers to its
subsidiary, which pays them their living allowances and places them with the client. In case of offshore projects, Mastek executes them in India. The subsidiary bills the client in either case and collects the receivables. From the revenues collected, the subsidiary pays the living cost and salaries of software professionals stationed in that country, meets its own fixed expenses, remits the offshore and development service charges incurred in India to Mastek and retains the balance as profit.