When London’s local administration embarked on an ambitious project to decongest the city’s bumper-to-bumper traffic two years ago, it didn’t know exactly what to expect from software vendors it had short-listed. London faced heavy congestion during peak hours and traffic was moving below 10 mph.

While some people commented that the project was bound to fail, others were skeptical about the viability of the project itself. But an Indian software company Mastek Limited, based around 5000 miles away in Mumbai was prepared for the top job. Mastek’s challenges included high volume, heavy load and multi-vendor system integration.

Mastek delivered software that not only helped U.K’s largest city clear excess traffic but also penalize erring drivers. Traffic was reduced by 10–15 percent; queues came down by 20–30 percent and traffic speed increased by 10-15 percent. And the software was not new but tried and tested in the City-State of Singapore but slightly retuned to serve the needs of London where vehicles come from all parts of U.K.

And when Mastek delivered this system, it was a result of lessons it learnt five years ago when it did a complete ‘U’ turn of its business practices and decided to concentrate on four important segments. The decision was long overdue. “Way back in 2000, we consciously decided to do only four things and the dividends paid,” says Ashank Desai, Chairman and Managing Director, Mastek Ltd.
Earlier Mastek (BSE: MASTEK) was a total solutions company building application solutions for large and small customers.

But after the overhaul it concentrated on Fortune 1000 clients, to do more work offshore than onsite, focus on areas where they are good so as to have competitive advantage and build partnership model.

The $100 million (Rs.4.30 billion) company’s Fortune 1000 customer base has swelled. Mastek’s revenue per client too has tripled since. “Before 2000 we had fewer Fortune customers but after redoing our business plan, our Fortune customer base has increased, so has our revenue,” says Desai adding the growth has helped increase employee strength to 2800.

With the expansion of customer base, Mastek is all set to make it big in Europe. Mastek is perhaps the only Indian software company, which has more revenues from Europe. While for other Indian IT companies revenues from Europe has more or less remained static or declined, Mastek has been fortunate to see revenues rise by as much as 12 percent while the revenues from the U.S. operations, a major market for other Indian IT companies, has declined by 5 percent. “Today we are the only company making more profits from Europe than the U.S.” Desai adds.

Shekhar Singh, analyst with ICICI Securities says, “The U.S. is a major market for software companies as they get 60-65 percent of their business from there. If Mastek is not well diversified (in terms of U.S. operations) then other Indian software companies too are not equally diversified (in terms of European operations).”

The European operations have risen due to strong emphasis on offshore work. Five years ago, over 60 percent of Mastek’s operation was onsite while the rest was offshore. But continued emphasis on offshore business has been successful. Today the onsite-offshore figures have reversed. 70 percent of their work is offshore while the remaining is occupied by onsite contracts.

Mastek’s offshore model is transparent. “If we had continued with same onsite-offshore mix, our revenues would have been double. But that was not what we wanted. We wanted to grow our offshore model and mature with that. Revenue was not the only target. Our target was long-term sustainable business.”

Long-term business also meant the company had the courage to refuse business, which had no long-term offshore contract, a tough job considering the fact that most businesses survive on whatever they get.

Bringing in a discipline can also mean focusing more on strategic model. So Mastek, which has been strong in the finance segment, decided to remain specific in the insurance sector. “We have been doing very well in the Asia Pacific region and decided to tap the U.S. and U.K. markets.” Desai says the company has built solutions meets almost all needs of an insurance company. “We allow Fortune 1000 insurance companies to migrate by providing step by step components for their complex systems. This has helped us to position ourselves as a complete service provider and get into the top 15 insurance companies in the U.S. and U.K.”

“Most insurance companies still run on old legacy systems. Therefore chances of replacing old legacy systems with standard packages are very high. Hence insurance is one such area, which most Indian companies are targeting. Mastek has done very well in this segment.

They have won a few contracts and have had certain successes and hence Mastek certainly stands out,” says Singh. Partnership like the one with Capita in the U.K. has helped Mastek bid successfully for decongesting the London roads. Another partnership with the British Telecom consortium for the National Health Service scheme, one of the world’s largest deployments of service oriented architecture where Mastek will be responsible for the development and support of data integrity, terminology, reporting services and electronic transmission of prescriptions, has been successful.

While projects in the insurance sector provide 45 percent revenues, government-public sector work contributes to almost 35-40 percent. It is these partnerships that have helped Mastek to become one of the top five Indian IT Companies in the U.K., both in leadership and brand positioning, something, which Mastek wants to replicate in the U.S. but has failed due to lack of right partners in the U.S.

Singh says in the long run Mastek will have some concerns in the U.S. The major one is the sustained losses in the U.S. market where their margins are still in the negative.

Desai is candid in admitting that not having the right partnership in the U.S. like in U.K. has hurt the company hard. “But we are trying our best to reengineer our business in the U.S. and soon we will make a dent there as potential exists. When we reengineered in 2000, we decided to focus on large customers and did not worry about revenue but quality.”

Mastek has posted its Chief Executive Officer Sudhakar Ram to the U.S. to lead the business.

No one should be surprised if Mastek comes out with flying colors with strong emphasis on quality and decongest the competitive traffic of the IT world.