"Technology is playing a very different role in making industries more competitive. So in a way job loss cannot be the criteria to judge what the demand is going to be for technology-related services," he said on CNBC-TV18.
Also Read: Gartner lowers global IT spending growth forecast
Citing a recent Gartner report, which has predicted a 5-6 percent growth in technology spends for calendar year 2014, he said the demand outlook seems stronger than H1FY14.
Below is the edited transcript of Krishnakumar Natarajan interview on CNBC-TV 18
Q: The latest news from the US is a bit of fright, the number of jobs created actually fell, do you still feel confident despite this fall in jobs data that the IT industry will have a good FY15 going forward?
A: Technology is playing a very different role in making industries more competitive. So in a way job loss cannot be the criteria to judge what the demand is going to be for technology related services. If you have seen this recent Gartner report they have predicted a 5-6 percent growth in technology spends for calendar year 2014 and more and more companies want to leverage technology.
Today, if you find cash balances of many of the global enterprises, they are sitting on a lot of cash, they now want to invest in technology to be more competitive and consequently I don't see job losses or lack of creation of jobs in the US in any way impacting the demand of the Indian IT industry.
Beyond that many times demand is also relating to disruptions which happen in technology. Today if you look at the initial wave of disruptions which are happening with social mobility, analytics and cloud, that will create its new set of demands. So I am pretty optimistic in terms of the demand scenario for calendar year 2014.
Q: You have won the award for the most promising company, what went right for the company last year?
A: We are honoured to have received this award but essentially I think it is more market driven. I think three-four years back we certainly heard the voice of our customers indicating that they want us to be experts rather than being a generic services provider.
So we took a series of internal initiatives and strategy changes where we started focusing on a few segments, really gained depth in understanding the customers' business and focused on a few select clients and these very simple changes which we made in transforming the organisation has really helped us deliver superior value to both our stakeholders and customers.
Q: Last quarter you all reported a 200 bps improvement in your margins like many companies but now that the rupee has stabilised do you think that further improvement in the margin might be tough?
A: I will not be able to give you an indication (silent period) on this but with the rupee stabilising and we have had some headwinds of compensation increase for a percentage of our people and capacity addition with both these headwinds we will have a marginal drop in margins during this quarter but certainly we do believe that optimism and the demand outlook for the business is certainly much stronger than what we had seen 12 months back.
Q: The deal wins were strong even in the last quarter with the turn of events and data from the US and even Europe, would you say that things would get even stronger going into 2014?
A: At this point in time clearly we are seeing a far more uniform demand environment in North America which is our largest market accounting for about 60 percent of the revenues. Across sectors the demand pattern seems to be far more positive. Europe seems to be far more client centric, there are specific clients who are still cautious in their spending patterns in Europe so we would wait and watch at least for another quarter or two before we really think that Europe is also on the path of recovery.
Mindtree stock price
On January 14, 2014, Mindtree closed at Rs 1519.70, down Rs 101.3, or 6.25 percent. The 52-week high of the share was Rs 1685.00 and the 52-week low was Rs 731.00.
The company's trailing 12-month (TTM) EPS was at Rs 105.63 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 14.39. The latest book value of the company is Rs 314.24 per share. At current value, the price-to-book value of the company is 4.84.
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