Macroeconomic factors unlikely to stall tech modernisation: Mindtree CEO

Macroeconomic and geopolitical developments are unlikely to turn back or stall business-critical technology modernisation, IT services firm Mindtree's CEO Debashis Chatterjee has said.

He said there could be "momentary impacts" on the pace of decision-making in certain sectors, but with organisations across industries going all out to drive innovative outcomes, continuous differentiation and sustainable growth in the new normal, technology is bound to remain "at the heart of competitive advantage, market relevance, and business resilience".

The comment comes amid fears that the global economy may be facing an increased risk of recession.

In fact, some of the large global tech companies are already pulling back on aggressive hiring plans over concerns of a looming economic slowdown.

Asked how the global tech budgets will fare in coming quarters given high inflation and macroeconomic worries, Chatterjee said macroeconomic and geopolitical developments are unlikely to turn back or stall business-critical tech modernisation.

Going by experience, economic headwinds spur organisations to free up dollars from areas of inefficiency and redeploy them on initiatives with assured return on investment, he told PTI in an email interaction.

"This invariably drives greater technology-led innovation. Our robust first quarter performance has reinforced confidence in our ability to continue our growth momentum," Chatterjee said.

On whether signs of a global slowdown are beginning to show, the Mindtree boss said there are "no indications yet of any significant change in client behaviour".

"Digital transformation is not a one-off project, but an ongoing imperative," he observed.

The company will continue to closely monitor near-term macroeconomic developments and leverage opportunities created by the client's need to balance cost and digital imperatives, he pointed out.

On whether some verticals are susceptible to larger macroeconomic concerns or seeing a slowdown in decision-making, he said there are no indications yet of any significant change in the long-term plans of clients, "barring a handful of them in consumer-facing segments deferring spends".

Yet, it is early days to read a pattern in that, he added.

"These are more like pockets of softness resulting from supply chain dependencies involving certain countries. We are continuing to engage with our customers and see where we can help them both on the cost-saving as well as the digital transformation mandates," he said.

Last month, Mindtree reported over a 37 per cent rise in net profit for the June quarter and said it remained "confident" of growth momentum for the fiscal's first half and cautiously optimistic about the second half.

The IT company's net profit stood at Rs 471.6 crore in the April-June quarter against Rs 343.4 crore a year ago. Revenues for the current fiscal's first quarter came in at Rs 3,121.1 crore, logging a growth of over 36 per cent year-on-year.

Earlier this year, Mindtree and LTI (Larsen & Toubro Infotech), the two software units controlled by the Mumbai-based engineering conglomerate, announced a mega-merger to create an efficient and scaled-up IT services provider, exceeding USD 3.5 billion in total revenue.

On the market opportunities that the proposed merger will yield, Chatterjee said: "By unlocking scale benefits, a stronger portfolio of offerings across verticals, enhanced customer engagement, and streamlined delivery processes, the merged entity will be able to participate in larger deals, strengthen partnerships with ecosystem players and create a more distinctive employee value proposition".