Af­ter Black­stone Deal, Mpha­sis is on De­cen­tral­i­sa­tion

Mpha­sis CEO prom­ises to en­sure that its de­cen­tralised lead­er­ship style, which he terms as part of its soul, sur­vives post deal

The Economic Times - - Disruption: - Jochelle.Men­donca @times­

Mum­bai: Mpha­sis CEO Ganesh Ay­yar has said he will work to en­sure that the com­pany’s de­cen­tralised lead­er­ship style sur­vives af­ter its buy­out by Black­stone as it rep­re­sents “part of the soul” of the IT firm. The Ben­galuru-based firm had last year be­gun a re­or­gan­i­sa­tion pro­gramme fo­cused on mak­ing it­self more nim­ble, a process Ay­yar had likened to cre­at­ing a “chem­i­cal change in the com­pany”.

Ear­lier this month, pri­vate equity firm Black­stone said it would buy Mpha­sis in a deal that could be worth over $1 bil­lion. This raised ques­tions on con­tin­u­ance of Mpha­sis’ man­age­ment model since PE funds are known to cen­tralise deci- sion-mak­ing in their port­fo­lio com­pa­nies. “We are pre­par­ing our­selves for the change. Some­times peo­ple can be­come change re­sis­tant. But some of the things we will work to re­tain are to con­tinue to push the bound­aries of em­pow­er­ment and ac­cel­er­a­tion and to build this com­pany around spe­cial­i­sa­tion,” Ay­yar told ET in an in­ter­view.

As part of its man­age­ment re­jig, Mpha­sis had iden­ti­fied 17 ex­ec­u­tives in the rung be­low its ten-mem­ber ex­ec­u­tive com­mit­tee and em­pow­ered them to take de­ci­sions with­out higher-level ap­proval.

An­a­lysts have said that flat­ter de­ci­sion-mak­ing struc­tures will be part of how IT firms weather the move to more dig­i­tal ser­vices and of­fer­ings. In­fosys CEO Vishal Sikka is also ex­per­i­ment­ing with re­duc­ing the amount of peo­ple in­volved in de­ci­sion-mak­ing in some parts of the busi­ness, ET had ear­lier re­ported. Ay­yar said that Mpha­sis has not yet had a dis­cus­sion with Black­stone on its man­age­ment struc­ture but said it will do so once the deal moves closer to com­ple­tion. “Mpha­sis and Black­stone have a com­mon ob­jec­tive. There may be dif­fer­ent ap­proaches to the ob­jec­tive. Just be­cause an ap­proach is dif­fer­ent does not make it bad,” Ay­yar said.

He said that it is the com­pany’s re­spon­si­bil­ity to en­sure a good “on­board­ing” process for Black­stone. Ay­yar, who was in Mum­bai ear­lier this week to talk to in­vestors fol­low­ing the sale, said, ques­tions from the other share­hold­ers cen­tered around whether the com­pany would main­tain its de­tail in re­port­ing re­sults. He said in­vestors were also ex­cited about the po­ten­tial part­ner­ship op­por­tu­ni­ties with Black­stone port­fo­lio com­pa­nies.

Black­stone has said it will open its port­fo­lio of nearly 80 com­pa­nies, which have about $90 bil­lion in ag­gre­gate rev­enue.

“Th­ese would be arm’s-length trans­ac­tions. That is what I would want. We would have to com­pete against their in­cum­bent providers, of­fer a bet­ter so­lu­tion and win. Only if all else is equal, would I think that we would have an edge, to keep it in the fam­ily,” Ay­yar said.

He said that Mpha­sis will first go into the port­fo­lio com­pa­nies with its hor­i­zon­tal ser­vices, though it is yet to iden­tify any tar­gets.

Black­stone has said it will open its port­fo­lio of nearly 80 com­pa­nies

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