How Bengaluru-based IT firm, Mphasis got a new lease of life ?

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Mphasis Group, a global, multicultural organization headquartered in Bengaluru, India, specializes in providing a suite of application development and maintenance services, infrastructure outsourcing services and business & knowledge process outsourcing solutions to clients around the world.

Mphasis Limited was incorporated on 10th August of the year 1992. It was formed after the merger of the US-based IT consulting company MphasiS Corporation and the Indian IT services company BFL Software Limited.

Mphasis - Company Highlights

  • Startup Name-Mphasis
  • Headquarters-Bangalore, India
  • Industry-IT services, IT consulting
  • Founders-Jerry Rao, Jeroen Tas
  • Founded-June 2000
  • CEO-Nitin Rakesh

Mphasis - About and How it works?

Mphasis Limited is an IT services company based in Bangalore, India. The company provides infrastructure technology and applications outsourcing services, as well as architecture guidance, application development and integration, and application management services. It serves financial services, telecom, logistics, and technology industries.

The Company’s segments include Banking and Capital Market, Insurance, Information Technology, Communication and Entertainment and Emerging Industries. The geographical segments include United States of America, India, Asia Pacific and Europe, Middle East and Africa.

It offers cloud computing, cognitive solutions, digital services, securing businesses, application services and infrastructure services. The Company serves various industries such as banking and capital market which includes, retail banking, credit cards and payments, wealth management and brokerage, corporate banking solutions and investment banking technology. Its insurance industry includes, property and casualty, life and retirement and health. Its other industries consist of communications, energy and utilities, healthcare, life science, logistics, manufacturing and travel and transportation.

Mphasis - Logo and its meaning

With this logo, Mphasis aims to focus on Generation Z i.e. the generation ahead of the millennials. This focus has been derived from the future-focused customer strategies that Mphasis has been working towards throughout its cloud and cognitive transformation strategy and heralds the 'next' that Mphasis seeks to apply constantly.

Further, it symbolizes Front2BackTM Transformation, a unique approach architected by Mphasis to apply a customer-centric digital transformation to businesses.

Mphasis - Founders and History

Mphasis was founded in 1998 in Santa Monica by Jerry Rao and Jeroen Tas.

Founders of Mphasis

Mphasis was formed in June 2000 after the merger of the US-based IT consulting company Mphasis Corporation (founded in 1998 in Santa Monica by Jerry Rao and Jeroen Tas.) and the Indian IT services company BFL Software Limited (founded in 1992).

In June 2006 Electronic Data Systems (EDS) purchased a controlling stake in the company (42%) for $80 million and operated the company as an independent EDS unit.

On 13 May 2008, Hewlett-Packard confirmed that it had reached a deal with Electronic Data Systems to acquire the company for $13.9 billion. The deal was completed on 26 August 2008.

In September 2009 Mphasis changed its brand identity by dropping EDS association to become "Mphasis, an HP Company" after HP retired EDS Brand to become "HP Enterprise Services". Mphasis operated as an independent HP subsidiary with its own board and continued to be listed on Indian markets as "Mphasis Limited". HP owned close to 62% in Mphasis and Mphasis got around 50% of its revenues from HP.

Mphasis marked $1 billion in revenues and registered a consolidated revenue of Rs 50.37 billion ($1,099.3 million) for the year ended 31 October 2010 becoming the sixth Indian IT company to do that.

In February 2014, Mphasis changed its logo and the brand name as Mphasis Unleash the Next, seeking to boost business other than from parent Hewlett-Packard, its largest client.

Mphasis - Recent News

Mphasis allots 1500 equity shares under ESOP.

Mphasis allots 21,020 equity shares under ESOP.

Mphasis' direct revenue grew 9.7% qoq and 25.2% yoy on a reported basis. In constant currency, revenue grew 10.9% qoq and 18.4% yoy.

Contour and Mphasis partner to accelerate the global trade finance.

Mphasis - Mission

Mphasis' mission says "Our mission is to be a specialized enterprise at the confluence of people, profit and planer. Powered by inquisitive minds, we leverage our global talent and innovative blend of services and technology to deliver customer delight."

Mphasis - Business Model

Mphasis provides information technology services to its customers around the world. Mphasis provides integrated solutions that include business process outsourcing, infrastructure technology, and application services. The application services offered by the company includes application development as well as applications maintenance and support services. The markets served by the company are financial services and insurance, healthcare, manufacturing, government, transportation, communications, and consumer and retail industries.

The CEO said, "Businesses have always had to keep up with the times. But the exponential growth of technology that the world has witnessed in the last few decades has given it a new meaning. Not only has the digital reality of 'everyone is connected to everything' paved the way for greater insights, it has also improved productivity and in the process radically transformed the role of the customer."

Mphasis - Revenue and Growth

Mphasis's revenue is the ranked 7th among its top 10 competitors. The top 10 competitors average 2.9B. Over the last four quarters, Mphasis's revenue has grown by 2.9%. The net profit grew 3.9% y-o-y but decreased 22.1% sequentially to  ₹275.1 crore in the June quarter.

The growth will be mainly driven by the banking and capital markets and logistics & transportation sectors, which grew 22.1% and 21.6% y-o-y respectively during the quarter-ended June.

The company won new deals worth total contract value (TCV) of $259 million in Q1 with 79% of the deals belonging to the ‘new-gen’ services that basically refer to its digital business comprising cloud, automation, and related technologies.

Mphasis - Funding and Investors

Mphasis has raised a total of ₹5.3B in funding over 1 round. This was a Post-IPO Equity round raised on Apr 2, 2020, Blackstone Group being the lead investor.

Mphasis - Acquisitions

Mphasis has acquired 3 organizations. Their most recent acquisition was Stelligent on Nov 8, 2018. They acquired Stelligent for $25M.

Mphasis - Turning Point

Takeover by the US-based private equity firm Blackstone and a sharp turnaround in HP channel, which constitutes nearly 30 per cent of its business, have changed the fortunes of the midcap IT company MphasiS.

The Bengaluru-based IT services firm got a new lease of life when Blackstone acquired a controlling 60.5 per cent stake in the company from Hewlett-Packard Enterprise (HPE) in September 2016. That apart, a sharp U-turn in the company's HP segment, which was declining 15-20 per cent every year till two years ago, proved to be a boon. (HP/DXC is a common entity/ segment which emerged after HP merged with another company CSE, which is now called DXC.)

The turnaround is reflected in MphasiS' stock price, which has nearly doubled (up 93.5 per cent) from Rs 500 on November 11, 2016 to Rs 968 as of November 12, 2018. The stock outperformed most of its peers in the IT segment and the S&P BSE Sensex and moved up 30 per cent during this period. Prior to this, MphasiS had remained subdued for six years, declining 14 per cent from Rs 581 apiece in November 2010 to Rs 500 in November 2016. IT stocks during this period have gained up to nearly 5,000 per cent.

Mphasis - Competitors

Mphasis competitors include Accenture (US), Wipro Limited, IBM, Infosys, Mindtree and Microland.

Mphasis - Future Plans

Midsize IT firm Mphasis expects to grow faster than the industry average in fiscal year 2021, as clients in banking and financial services spend more on technology to shift operations away from offices to the Cloud, following the Covid-19 pandemic.

“Our exposure to segments affected by the shutdown hasn’t been  much, it’s mainly financial services, wealth management and security  houses. The crisis has shown how every business is a digital business,”  CEO Nitin Rakesh told ET.

In the weeks since the outbreak, Mphasis saw businesses forced to go digital in its main markets in the US and Europe and this is likely to continue.

With companies needing to shift to a virtual model, most customers are looking at how they can engage with clients in a seamless and contactless manner. The company will focus on doing just that. “For us, the ability to have the security architecture and design layer to do this while ensuring that you can carry your past investments with you will be key,” Rakesh said.

The further acceleration of digital transaction capability for digital contactless customer experience redesign and remote onboarding as well as leveraging data strategies could drive growth going forward.

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