Mindtree could see its active client base contract further over the next quarters as the company continues to rationalise its long tail accounts to focus largely on key strategic accounts. CEO Debashis Chatterjee told
CNBC-TV 18 that the company did not have a timeline as of now as to when the client base would stabilise and did not share the ideal number that the company was looking at.
The active client base for Mindtree stood at 283 in Q2 Vs 292 in Q1. This is also a sharp year-on-year fall, when the active client base in Q2 FY20 was at 343.
“Our strategy is to build deep relationships with strategic clients. We have done rationalisation of long-tail accounts. Over the last year, we have done significant rationalisation, and it will continue,” Chatterjee said.
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“Total active client number will continue to fall, but there is no timeline," he added.
“We can’t call out an ideal number. But we have active strategic clients where we want to really cross-sell and upsell” the Mindtree CEO said.
Mindtree, however, also saw a contribution from the top ten clients falling marginally in Q2 from Q1.
“We have exposure to the travel and hospitality sector, and some of the clients from this sector are no longer part of the top ten as per revenues, so there is a shift,” Chatterjee said.
“We want to stay focused on top ten clients,” he added.
Top client Microsoft’s contribution to Mindtree’s revenues also fell marginally in Q2 to 28.9 percent after having reached 30 percent in Q1.
In the corresponding quarter of FY20, Microsoft’s contribution to the overall revenues of Mindtree stood at 20.6 percent.
“I want my top client to grow and my top 20 clients to grow, and if that happens we will get a fine balance,” Chatterjee said.
Mindtree saw total contract value (TCV) fall to $303 million in Q2 from $391 million in Q1, which the CEO said was largely due to a spike in Q1 due to renewals.
“We do renewals in Q1 which led to a spike in TCV in that quarter. Overall, the TCV in H1 was 10 percent more over last year,” Chatterjee said.
Mindtree saw revenues grow 3.1 percent sequentially to $261 million, with margins expanding to 19.6 percent in Q2.
Chatterjee said the slight fall in headcount at Mindtree helped in margin expansion, even as the company had a focused program on improving margins over the last 12 months.“We have reached a comfortable margin band, and our endeavour is to sustain this,” he added.