- The IT services industry has seen decreased profitability due to cost cutting measures during the economic recession. Companies that managed costs well have recovered better than those heavily focused on Europe. - Mastek suffered losses in Europe and is trying to increase its American business. It has grown through projects with lower margins. - Hexaware and Mindtree recovered better through the recession by improving productivity and expanding geographically while controlling costs like travel. Revenue is proportional to human capital, and offshoring ratios increased.

1. Chetan Goenka
Milind Gawaskar
Ravi Jha
Sonal Ghai
Tarun Kapur
Group 6

2.  Decrease in overall profitability
 Cost Cutting in over-heads, travelling and administration
 Revenue per employee is going up
 Gap of a year in coming to terms with recession
 EPS is better for companies managing their costs well
 Companies with American focus have recovered more than
those with EuropeanAccounts

3. 2007 2008 2009 2007 2008 2009 2007 2008 2009
Mastek Mindtree Hexaware
Others 15% 13% 8% 15% 16% 17% 7% 6% 7%
Europe 65% 61% 57% 22% 18% 23% 27% 29% 27%
Americas 20% 26% 34% 63% 66% 60% 67% 65% 66%
0%
20%
40%
60%
80%
100%
120%
%Revenue
Mastek has suffered losses in
Europe and is trying to increase
American accounts

4. 14%
15%
9%
14%
4%
17%
1%
5%
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2007 2008 2009
ProfitMargin
Mastek MindTree Hexaware
Mastek has grown
because of its falling
margins

5. 3.70
3.47
1.89
2.48
0.53
2.81
0.10
1.05
2.13
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2007 2008 2009
ProfitinLakhsINR
Mastek MindTree Hexaware
Profit per employee
falling because of
falling margins for
Mastek

6. 24.4
26.6
23.6
14.2
7.4
13.2
14.7
20.5
16.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2007 2008 2009
RevenueperEmployee(inRs.lakhs)
Mastek Mindtree Hexaware
Change in onshore
offshore ratios which
have resulted in
reduced billings

7. 33% 34%
46%
33%
27%
37%
52% 52%
49%
0%
10%
20%
30%
40%
50%
60%
2007 2008 2009
%ofRevnue
Salary Expenditure as Percentage of Revenue
Mastek MindTree Hexaware
Salary as a fraction of
revenue increased
because of decreasing
overhead costs

8. Travel Expenses have in
general fallen across the
industry as companies do
more work through web
conferencing
3% 3% 3%
12%
5%
7%
7% 7%
5%
0%
2%
4%
6%
8%
10%
12%
14%
2007 2008 2009
Travel/Sales
Travel to Sales
Mastek Mindtree Hexaware

9. 43.88
50.78
24.59
26.9
13.59
53.87
0.2
3.94
9.1
0
10
20
30
40
50
60
2007 2008 2009
Earningspershare(Rs.)
Mastek Mindtree Hexaware
Profitability
of companies
.Though hit
by recession
Hexaware
and Mindtree
recover well

10.  Hexaware and MindTree are good investment bet
 Mastek has been gaining back its revenues with projects that have
lesser profitability
 Overall productivity increases achieved through better utilization
of employees
 Companies have looked to expand in different geographic
location.
 Revenue is directly proportional to number of human capital
 Increase in off shoring of not new work but existing work. With the
ratio going up from 6:4 to 8:2.

12. ` in Cr.
Mar-07 Mar-08 Mar-09 Mar-07 Mar-08 Mar-09 Mar-07 Mar-08 Mar-09
Parameter Mastek Mindtree Hexaware
Revenue 893.98 942.6 713.83 739.79 1,237.47 1,295.98 1,039.80 1,151.91 1,038.56
Net Profit 125.88 141.16 67.72 103.29 52.3 214.86 7.23 58.98 134.18
Earning Per Share ( ` ) 43.88 50.78 24.59 26.9 13.59 53.87 0.2 3.94 9.1
Revenue per employee 0.24 0.27 0.24
0.14 0.07 0.13
0.15 0.20 0.16
Number of Employee 3,400 4,071 3,584 4162 9887 7657 7068 5622 6300
Travelling
28 27 23 87.3 66.7 86.5 75.3 80.3 52.1
Total Expense
441 422 427 480 614 745 945 1101 931
Revenue by Region
Americas
164 253 333 373 484 607 693.5 746.4 685.1
Europe
528 585 553 131 135 235 277.6 334.1 282.2
Others
118 128 80 86 115 171 68.6 71.4 71.4
810 965 965 590 734 1013 1039.8 1151.9 1038.6
Salary
298 325 329 246 335 486 540.0 599.0 505.0
Attrition 14% 13.60% 14%
Onshore Offshore 77--23 7--3
Profit Margin 14% 15% 9% 14% 4% 17% 1% 5% 13%

13. Parameter Mastek Mindtree Hexaware
Mar-07 Mar-08 Mar-09 Mar-07 Mar-08 Mar-09 Mar-07 Mar-08 Mar-09
Travel Expense/Total Expense 6% 6% 5% 18% 11% 12% 8% 7% 6%
Revenue / Head Count (in Cr)
2,439,900 2,661,480 2,357,100 1,418,434 742,227 1,322,411 1,471,138 2,048,933 1,648,508
Total Cost/Revenue 49% 45% 60% 65% 50% 57% 91% 96% 90%
Americas 20% 26% 34% 63% 66% 60% 67% 65% 66%
Europe 65% 61% 57% 22% 18% 23% 27% 29% 27%
Others 15% 13% 8% 15% 16% 17% 7% 6% 7%
Earning Per Share ( ` ) 43.88 50.78 24.59 26.9 13.59 53.87 0.2 3.94 9.1
Profit Margin 14% 15% 9% 14% 4% 17% 1% 5% 13%
Salary / Revenue 33% 34% 46% 33% 27% 37% 52% 52% 49%
Netprofit/Headcount 0.04 0.03 0.02 0.02 0.01 0.03 0.00 0.01 0.02