India's technology services companies - from the large caps to the mid-sized firms - are trying to break the umbilical cord tying revenue growth and headcount addition. For instance, MindTree, which was facing a lot of trouble off late including the exit of its founder chairman, has rebounded if first-quarter results are anything to go by. Margins have improved and profit after tax this quarter has grown 120% year-on-year. Sustaining margin growth may be difficult in the coming days given the tough pricing environment, but the firm's Chief Executive Officer KK Natarajan is not willing to reduce his bets, yet.
And one of the principal reasons behind his optimism is a critical internal goal that even the bigger peers haven't been very successful in achieving - moving away from the traditional per employee per hour model. The company has set a target of growing only 25% in terms of employees by the time it hits half-a-billion dollars in revenues.
As revenues swell, large companies like TCS, Infosys and Wipro, collectively employing more than 5 lakh, have been struggling with a large workforce. The desire to de-link employee growth and the topline has been a source of concern across the industry. Growing revenues faster than the growth in employees improves profitability as expenses can be kept in check. Global IT giants like IBM and Accenture have shown in the past that increasing the share of non linear business should be the key focus.
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