Differentiating with Services and with the Delivery Model to fight the biggies

Differentiating with Services and with the Delivery Model to fight the biggies

Genesis of Mindtree

Krishnakumar Natarajan (KK), Co-Founder of Mindtree did his education in Chennai. He did his BE in College of Engineering, Guindy and did his MBA from XLRI. In 1981, he joined the fledgling IT industry by taking up a job with ORG systems and then joined Wipro as one of the early employees when the IT business just started. Wipro began as an India based Hardware Company. He spent his time doing in multiple roles right from customer support, writing software, sales in southern region of India, Marketing and also Human resources giving him a perspective of how multiple departments will work and saw Wipro growing very fast. In his final stint at Wipro, he started the e-commerce and also the financial services division. Having been an integral part of Wipro’s growth, the thought of doing something on his own became strong and he co-founded Mindtree.

Differentiating with Services and the Delivery Model

On the services, he knew that e-commerce will become a big slice of the IT business even though the generic software services constituted 90% of Wipro’s revenue. By 1999, Internet was gaining traction and lots of niche IT companies were building capacities and were competing against the Larger software companies and were taking their customers away. Since he had worked with the Who is Who’s of the industry (F100 clients), he chose to focus on providing solutions only to the large enterprises and not to the SME market.

He chose e-commerce as the core service of Mindtree which was not offered by the large players. He also differentiated Mindtree from the traditional IT companies by not competing on cost but helping his clients with an end to end solution and began building internal capabilities accordingly. Mindtree, as an internet solutions provider began understanding the business problems of the customers and offered solutions on how the customers can change the way they were working. This approach required an On-Site Consulting background coupled with the cost effective software delivery advantage of India. The team conceived the “One Shore Model” that begins with consulting and goes on to building solutions in a distributed model. The concept evangelized on not being obsessed about where the work is done (offshore) but being focussed on the right location of the job . They found a large opportunity to create a next generation solutions company which does not necessarily compete on costs but solves critical business problems.

Choosing the Complimentary Founding Team

Since Mindtree did not have a front end consulting company, they got together with a group of executives from Cambridge Technology Partners who were the leaders in fixed price and fixed time delivery model and sold them the dream and the concept. Those people were also thinking on how they can create a strong traction of the internet and this idea appealed to them and they also joined hands.  Thus Mindtree’s core founding team were Five people from Wipro(specializing in outsourcing business), Three people from Cambridge Partners(specializing in consulting) and Two people from Lucent (specializing in technology). The combination of several partners, KK says, was an important lesson that he learnt. He says that a company needs to have founders with complementary skills. One needs diversity in strengths and skills to make an enterprise be successful as getting the First Few Customers is the most difficult task at the end of the day to get off the ground and taking the company in the growth path.

Talking about the initial sales, KK talks about a couple of experiences. The team was very clear on the Value Proposition and also had the capability to explain it in simple terms to their prospects. The simple message of “We are there to help to you leverage internet to solve business problems” resonated very clearly with the Businesses and with the CEO’s.  Mindtree took the end to end responsibility to deliver value and showed the Total Cost of Ownership of these solutions at a competitive level.

Sales Outreach in the early days

With that sort of easy messaging, they tried the traditional approach of selling – Going after the old contacts to get business. KK says that they learnt another lesson. All the old connects will not necessarily give business because they have seen large organization behind you in the past. Today, the company he represented was nothing but a start-up. KK found the same positiveness or desire to give business to a large organization became a doubt in the capability to deliver. KK says that lots of meetings happened because of the contacts but did not translate into business.

The team relied heavily on cold calling as a way to reach out to the prospective customers. The first customer came in from a “Golden Hour Rule” which means that a senior executive of a large enterprise is likely to be reached when they are called before or after office hours when the telephone operators or the cXo’s admins are not there and the person directly picks up the phone. The Head of Marketing of Mindtree called into the Car Rental Company Avis. The CIO picked up the phone early in the morning  and the three simple message was communicated within 2 minutes which got them the face to face meeting with the CIO.

The First Customer closure

The team which were veterans in selling, seized this opportunity to do lots of research about the industry, company and the CIO and prepared a first draft presentation. They knew that this one meeting with the CIO might be the last meeting if they don’t give it their best and went in to the meeting. They presented like there was no tomorrow and within ten minutes, they got the go ahead to meet the other stakeholders within the company. The CIO was impressed by seeing the combination of the details in the presentation such as the value proposition to AVIS, outlining the client benefits etc.

After a few rounds of discussions, they found out that AVIS was overawed by developments on internet and wanted someone knowledgeable to help them. Since Mindtree positioned itself as an internet solutions providers and demonstrated lots of capabilities and showcased the people in their team, they got the go ahead in an area where the existing incumbent large vendors were not playing and landed their first large logo AVIS.  Once they got in and completed their first project well, they wanted to expand within the account beyond the first win. They began cross selling the other services and became a big vendor for AVIS.

Segmenting the Customers

On the segmentation, KK realized that it would take a lot of time to compete against large vendors. The team wanted to reduce the sales cycle and decided to focus on one segment where they thought they can compete against the larger vendors easily. The next tier of companies that did not have either their own centre or an existing third party offshore development centre in India. He knew that competing with his alumnus or the other large global IT firms will be an uphill task because these companies were entrenched with their customers and the large enterprises will have no motivation to choose a start-up and give a portion of the same business. The founding team began their research on such companies and began their segmentation. KK says that this is one more lesson he learnt – Play the game in a category/segment which the existing large incumbent vendors would not play in and get your foot in the door.

Second Customer Closure

When they reached out to Volvo’s head-quarters and tried speaking to the CIO, they heard that he had gone to India to meet a few large IT vendors to finalize a long term agreement. They learnt that Volvo was in-fact setting up their truck operations in India and had no experience in working with Indian IT vendors. The team had lots of business connects and did lots of research on the internet to outline the prospects business challenges. Since visiting Mindtree was not on the CIOs agenda, the Mindtree team found the hotel he was staying in and waited for him to come in and got into the lift with him. There they made the real elevator pitch within the elevator. That got the CIO interested and even though he did not have the time to visit them, he found the people genuine and gave them a 90 minute meeting which was fixed at 8:00AM the next day.

The team at Mindtree wanted to make the visit memorable and give a WOW factor from the first minute. The team spent the entire night in preparing a custom presentation on their capability and competency based on the short conversation they had with the CIO. Even though, they had no customers to refer, they prepared a lot about the core team, their past organizations and what they can bring into this experience from an One Shore Model. They hunted the whole night and got a Volvo car which was very rare in India those days and they picked up the customer in that car which was a pleasant surprise for the CIO. The small details made a difference. The CIO was very impressed with the capability of the team but had lots of doubts in his mind.

The standard objections that came in their way was that they had no reference able customers as they had been in the business only for a while. The questions revolved around what the guarantees were that they won’t close down for which their backgrounds helped. They also took the main engineers and the project managers who had experience in working in the automobile industry and showcased them as the main people who will be doing the project. These domain experts spoke about the problems of the industries and how they had solved it in the past. On the continuance of business, the initial fund of USD 10Mn of capital they had raised coupled with their personal track record got them the second logo Volvo

One area he could have done better

One area which we did not enter early was the Package Applications space- particularly SAP. If given a chance to recreate we would do it earlier and at scale.

Advice to early stage entrepreneurs

Divide & Conquer- chose a market segment where you can demonstrate differentiation. Choose your target segment with care and take simple /impactful message to them.

Mindtree today

They have over 14000 employees today and close to USD 600 M revenue. They provide services in e-commerce, mobile applications, cloud computing, digital transformation, business intelligence, data analytics, testing, ERP, EAI to name a few. They have over 200 customers and has 28 offices in over 14 countries. Mindtree went public in early 2007 and got listed in both BSE as well as NSE. They have acquired around 8 companies to augment their services.

They have been named as a leader in Zinnov’s Global R&D service provider ratings for the third year in a row. They are ranked #1 under categories of Beat Managed IT/Software/Technology company in Asia and the Best Managed company in India for 2013 by Euromoneys Annual Asia Company Ranking. They have also won the “Most promising company of the year 2013” from CNBC and been selected by Forbes Asia as one of the “200 best under a billion companies of 2012” to name a few awards.


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