CASE 1

Mastek: Consistently Riding ‘The Third Wave’

This case study is based on our video interview with Sudhakar Ram, Chairman and Managing Director, Mastek

SYNOPSIS

Three management school graduates of IIMA formed ‘Mastek’ which means Management Systems and Technology in 1982. Mastek founders were Ashank Desai, R. Sundar, Ketan Mehta, who were later joined by Sudhakar Ram. This was one of the earliest IT companies formed.

In its early years, the IT industry in India established Indians as software professionals in the world market, which could be termed as First Wave of the IT industry. Thereafter, the Second Wave began which made India a Programming Destination. This implied that work from the western countries was being outsourced to India, primarily because of the IT skills available with Indians and more importantly, the skills were available at a rate much cheaper than that in the western countries. There was also the Third Wave, wherein the role of the IT Company was to provide solutions to management problems of the western world. The Third Wave represented a movement up the value chain of the IT industry, and only a few companies like Mastek took up the challenge of providing IT solutions.

Over the years as a Third Wave company; Mastek has developed the expertise in various domains including insurance, government, financial services, healthcare, etc., and providing solutions for complex and complicated problems.

Mastek is led by the Board of Directors and the Executive Committee who are driven by the company’s vision and value statements.

Recently, Mastek has developed a new business model and strategy which provides direction to the company and its employees and consists of five important focus areas. However, Mastek’s steady performance over the years has been punctuated by a fall in turnover in the years 2008–09 and 2009–2010 because of the global slowdown. It is on the recovery path but has not reached its highest achievement point. Efforts are on by the management of Mastek to try and improve its performance, and the time is not far when it would exceed its best performance.

The performance of an IT company is dependent on the expertise, commitment and motivation of its employees. Mastek has over 3000 employees and has been able to attract good employees. This is so primarily, because of the opportunities it provides for working on large and complex international systems and solutions. It also pays reasonably good salaries and has a good working atmosphere. Its HR policies also promote the growth and development of the employees with a fair amount of incentives. It is for these reasons that the attrition rate at Mastek is not as high as it is in other IT companies. In fact, the attrition rate is well under control.

Besides a good HR policy, the company also does a lot in the areas of Corporate Social Responsibility and Corporate Governance and involves employees in them. Mastek has received a number of awards for its excellent performance as an IT company. It is now poised for another spate of growth and development to take it to another height of success.

INTRODUCTION TO THE INFORMATION TECHNOLOGY INDUSTRY

The birth of the Information Technology industry took place in Mumbai in the year 1967. In 1973, the first software export zone in SEEPZ was set up and which facilitated 80 percent of India’s software exports from Mumbai in the 80s.

The IT industry went through three waves:

• Wave 1: Establishing Indians as software professionals.
• Wave 2: Making India as a programming destination.
• Wave 3: Establishing India as a ‘Solutions Brand’. Delivering high end technology solutions by leveraging Intellectual Property and deep domain knowledge.

Wave 1: Establishing indians as software professionals

The first wave of the industry which started in the 1970’s was to establish that the Indian software professionals were good and could hold their own against the best in the world.

This wave (see Figure 1.1) started hitting its peak in the late 90’s, during the heady days of the dotcom boom, when money was being spent on technology as if there was no tomorrow, and competent professionals were in extreme short supply, especially in the US. Estimates show that at its peak during the year 2000, staff augmentation would have generated around $2 billion in revenues for Indian industry.

Wave 2: India as a programming destination

In the early 90’s, a few visionary American companies saw the potential of India as a base for software development, in the light of the spiralling IT costs in their own parts of the world. Companies like Texas Instruments and Motorola started their own Research and Development centres in India to capitalize on Indian talent.

On the other hand, companies like Nortel and GE decided to partner with local Indian software services companies to set up offshore development centres. In parallel, Indian software companies were making significant investments in quality.

It started as a movement for ISO certification, an external seal of approval that the companies had a documented process of software development. The ISO movement gave way to the CMM movement, which was developed by the Software Engineering Institute of Carnegie Mellon, specifically catering to software development processes. Today, almost every firm in India considers CMM Level 5 assessment to be a hygiene factor, and almost three quarters of the world’s level 5 companies are now in India.

New Awakening

The next critical event that triggered the growth of India as a software destination was the Y2K (Year 2000) bug. The estimates of what it would cost the developed world to fix this problem was widely varying, but usually in tens of billions of dollars.

The fact that Indian companies were ready and able to handle the Y2K scare at a fraction of the cost using very systematic and mature development processes in their offshore centers was a turning point.

Today, offshore development and maintenance has dwarfed staff augmentation services, and probably generates around $10 billion of revenues. Sudhakar Ram believes that this wave is still at its growth phase and would reach its peak around 2010.

However, the Indian firms are not perceived as adding value in terms of intellectual property or consulting and design inputs.

Wave 3: India as a ‘Solutions Brand’

Just as the industry grew by almost one order of magnitude by transitioning from being a provider of competent people to a provider of high quality service, the next quantum jump can only happen if Indian IT companies can manage to make India a trusted brand for delivering complete solutions.

This shift can only happen if the current set of Indian IT companies can transform themselves into Third Wave companies, trusted by customers to deliver complete solutions that deliver business impact and cross the $100 billion mark.

Mastek actually opted for being a Third Wave company right from the start unlike heavyweights like TCS, Wipro and Infosys who followed the first and second waves and have very slowly moved to become third wave companies. Being a third Wave Company meant that one had to be oriented towards being a solutions company. This involved developing expertise of certain verticals, such as insurance, healthcare, etc.

The IT industry in India developed along certain lines as under:

The history of the IT industry in India can be equated to its outsourcing history. In a world where information technology has become the backbone of businesses worldwide, Outsourcing is the process through which one company hands over part of its work to another company, making it responsible for the design and the implementation of certain business processes under the requirements and specifications of the outsourcing company.

Although the IT industry in India has existed since the early 80’s, it was in the early and mid 1990’s that saw outsourcing in the areas of medical transcription, data processing, medical billing and customer support. Some of the earliest players in the Indian outsourcing market where American Express, GE Capital and British Airways who requisitioned a number of services from India.

Some of the characteristics, which led to the phenomenal success of the IT/BPO industry in India, are as follows:

• Abundant, skilled, English-speaking manpower, which is being harnessed even by ITES hubs, such as Singapore and Ireland.
• High-end telecom and infrastructure which is at par with global standards.
• Strong quality orientation among players and their focus on measuring and monitoring quality targets.
• Fast turnaround times and the ability to offer 24x7 services based on the country’s unique geographic location that allows for leveraging time zone differences.
• Proactive and positive policy environment which encourages ITES/BPO investments and simplifies rules and procedures.
• A friendly tax structure, which places the ITES/BPO industry on par with IT services companies.

The IT industry was given a fillip particularly by the Indian Government because of the all-round initiatives, which involved:

• The growth of outsourcing to India especially after Y2K.
• Formation of Ministry of Information Technology (MIT) which aligned the vision of ‘Making India an IT super power by the year 2000’.
• Establishing of Software Technology Parks (STPs) to provide single window statutory services
• Creating a Government Diaspora Partnership that went a long way in developing India a topmost software destination
• Formation of NASSCOM

For facilitating the above process of outsourcing, NASSCOM (National Association of Software and Service Companies) created platforms for dissemination of knowledge and research in the industry through its surveys and conferences and acted as an ‘advisor, consultant and coordinating body’ for the ITES/BPO industry and liaisons between Central and State Government Committees and the Industry.

For the above reasons, IT has exploded in India by becoming one of the largest sectors of the Indian economy. IT output once estimated at $50 million in 1991 was projected to reach $50 billion by 2008–09.

INTRODUCTION TO MASTEK

In 1982, the idea of Mastek originated at IIM Ahmedabad, where Ashank Desai, R. Sundar, and Ketan Mehta were batchmates and keen to start a venture together. After toying with multiple ideas, they finally decided to venture into IT software, as it was not as capital-intensive as manufacturing or even IT hardware. Sudhakar Ram, an alumnus of IIM Calcutta, was one of the first customers of Mastek and later decided to join the founders’ team.

The business environment during the 1980s was not conducive for entrepreneurial activity. The risks were significant, and the rewards uncertain.

It was at this time that the fledging Information Technology industry received a shot in the arm by the then Prime Minister Rajiv Gandhi. He considered it a priority industry and provided it with sops and facilities it needed for growth. Moreover, the liberalization of the economy and the recognition of Source to India (S2I) became a big event for the growth of the IT sector in particular, and the country in general.

Today, Mastek is a ₹692 crores (FY 2013) publicly held IP led IT player with global operations providing enterprise technology solutions to insurance, government, and financial services organizations worldwide. It currently employs over 3000 people with operations across North America, Europe, Middle East and Asia Pacific regions. These employees had not only to be competent and committed, but had to be led well.

VALUES, IDEALS AND OBLIGATIONS

The Board of Directors and Executive Committee provided the leadership to the organization and have been guided by values and a set of ideals.

Mastek’s Values:

• Open Atmosphere
• Collaborative Teamwork
• Respect for the Individual
• Pride in Work
• Enduring Relationships
• Customer Engagement
• Commitment to Creating Business Impact

Mastek Ideals

The driving forces behind Mastek’s long and fruitful journey are the basic and cherished values established by its founders:

• Evergreen Institution
• Win for all
• 100% responsibility for Outcomes
• Collaborative Culture

Mastek 4.0

Mastek has adopted Mastek 4.0 which elaborates on its obligations to four of its stakeholders viz:

1. Employee
2. Customer
3. Shareholder
4. Society

Mastek 4.0 is elaborated in Annexure IV

BUSINESS MODEL AND STRATEGY

The Third Wave strategy has worked for Mastek. It is now a high-end firm specializing in building IT applications that enable its customers in their business innovation and transformation initiatives. It aspires to be the best at providing enterprise solutions to the Insurance and Government verticals, thereby gaining market leadership.

Corporate Identity: Mastek’s corporate identity has drawn upon the idea of the prism and is reflective of its status as an enabler of transformation. The new logo (a prism; see Figure 1.4) symbolizes the power to transform a beam of light into a brilliant spectrum of its constituent colours, Mastek represents the power to take its clients’ ideas and give them life as fully functional systems that support their transformation initiatives.

Mastek’s business model is highly differentiated when compared to that of other players within the Indian IT industry. While most of the firms in the country’s IT space rely primarily on labour cost arbitrage and scale, Mastek has, over the years, successfully mastered the craft of designing and delivering high-impact projects and solutions that tend to have an enterprise-wide influence and address customers’ business problems.

Strategic Steps

Mastek had formulated a comprehensive strategy in the form of the following steps:

Select Verticals and Investments in Domain and Technology:

Mastek, which had earlier been taking up complex and large transformational projects for customers across different industries, re-purposed itself to focus on specific industry verticals, Insurance and Government—contributing 65 percent to Mastek’s total revenues—where it had a strong track record and own intellectual property (IP) or re-usable frameworks.

This was driven by the realization that the ability to take an enterprise-wide view and provide a wellcrafted solution to a business challenge requires an in-depth understanding of the customer’s operations and industry. This in turn necessitated a clear focus on select sectors, where Mastek has significant differentiators in the form of a strong record of accomplishment and a unique set of proprietary frameworks and competencies. This vertical focus has had a beneficial impact on sales productivity, translating into revenue growth on one hand, and better operating margins and earnings on the other, year after year.

Partnerships and Strategic Customer Relationships:

For Mastek, the ability to forge effective and lasting partnerships with large, global partners is a key competitive strength. The company has an impressive record of accomplishment of collaborating with leading system integrators, such as Capita and BT Global Systems, co-creating and delivering projects to end customers.

Mastek collaborated with Capita, a UK-based firm, on the London Congestion Charging project where the company developed bespoke applications and integrated all those applications together on an enterprise-wide basis, implementing one of the world’s largest. NET projects in the process.

Leverage Technology for Business Impact:

Mastek’s core strategy is to go after the enterprise solutions market in the chosen verticals. It has looked for application areas that need re-invention and transformation. The applications that are targeted formed part of the strategic projects and new initiatives of client organizations. These required significant customization. Here, it is not enough to build the base IP solution but also to use the architecture and project management capabilities to build a customized solution that meets the strategic requirements completely.

Mastek understood the diverse business contexts in which technology can be applied. Its ability to design breakthrough solutions enabled clients to enhance value for their customers.

The DNA of Mastek has been to provide high-end technological development for its clients. It is therefore necessary that the company keeps pace with all modern systems and techniques. Over the years, Mastek has launched two important technological initiatives in the form of the Design School and the Technology Cell. The details of these initiatives are given below:

Design School: Mastek had invested in an IP based Design School to enhance its employees’ skills and capability in developing solution architects. A solution culture is engrained in the teams as a practice that is committed to solving real customer problems rather than just delivering to specifications. The Design School graduates are trained and encouraged to design their own answers to the questions that need to be answered in process of solution delivery, thereby adding value to the client’s business and leading to excellence in service.

Technology Cell: The continuous striving for technological innovation had developed a functional group at Mastek called Technology Cell, which played a vital role in keeping Mastek abreast with latest technology changes and supported the project teams with technological guidance.

SOME OF MASTEK’S SUCCESS STORIES: THE THIRD WAVE SOLUTIONS

Mastek was in a unique position since it has always been in the strategic solutions space. It had chosen high-end vertical enterprise solutions as its focus area. It currently operates in the public sector and government verticals with plans for entering financial services and healthcare at the appropriate juncture.

Amongst its various achievements as a Third Wave company, it has done exceptionally well in the international arena.

• Reducing travel time for citizens in London
• Underwriting efficiencies using technology innovation: Mortality Management Solution for a large US reinsurer
• CUNA mutual claims express: Customers with smiles, plus better profit lines

Reducing Travel Time For Citizens In London

The traffic in London was creating a lot of problems for its citizens and therefore the Mayor of London took the initiative to address this issue. A scheme was formulated whose aim was to deter drivers from making unnecessary car journeys through central London and reduce congestion. This initiative was called London Congestion Charging (LCC).

The Capital Group plc, a leading provider of integrated professional support service system in the UK, was the main company and Mastek was partner of choice and came to be involved in completing the world’s largest .net project with Microsoft.

The scheme broadly meant that drivers wishing to enter the Central London zone had to daily pay a charge of £5. In the new system there were no toll booths or barriers and vehicles moved freely in and out of London. However, there was an electronic video system which captured the data of each vehicle as and when it entered the city of London. After collating the data vehicles which had entered the city on more than one occasion, they were issued a penalty notice and through a well integrated back office network the congestion charge was levied and collected.

Capita engaged the services of Mastek to develop Bspoke applications, i.e., custom-based product and to integrate key business applications including an e-commerce website, call centre software, the image management system as well as the integration of the key external service providers.

The system provided various benefits:

Inside the Zone:

• Traffic reduced by 10–15 percent
• Queues reduced by 20–30 percent
• Traffic speeds increased by 10–15 percent

Outside the Zone

• Traffic increased on orbital routes by up to 50 percent
• Traffic reduced on radial routes by 5–10 percent
• Overall reduction in traffic by 1–2 percent

Underwriting Efficiencies Using Technology Innovation: Mortality Management Solution for a Large US Reinsurer

Transamerica Reinsurance (TransRe) is a leading provider of value-added product development, automated underwriting, and risk and capital management solutions to financial services companies in the life and annuity markets.

Transamerica Reinsurance found that a company could generate $4 million in increased profit for every $10 million in new annual premium by reducing claims expenses by 6.6 percent over the life of the block of policies. This is especially significant because for every $1 of term life insurance premium collected, approximately 60 percent is allocated to mortality expense.

Market Solution

Mastek, with TransRe, developed a new business and underwriting system, which is an innovative solution that enables business transformation, reduces risks, improves mortality rates and increases profits for life insurers. Mastek’s Vector New Business/Underwriting Solution (NBU) provides insurers with a powerful tool for processing all new business transactions from electronic application to automated policy issuance in order to create underwriting efficiencies while improving mortality results.

The system resulted in a number of operational efficiencies and at the same time contributed towards reduction in mortality rate, thereby generating increased profits.

The system introduced above had a business impact in terms of

• Increased productivity
• Better time to market
• Operational efficiency
• Met emerging demands of regulators and capital markets for more granular understanding and verification of product performance.

(Transamerica Reinsurance has been recognized with a 2008 Innovators Award for the mortality management system that was co-developed by Mastek.)

CUNA Mutual Claims Express: Customers with Smiles, and Better Profit Lines

CUNA Mutual Group (CMG) is the leading financial services provider to credit unions and their members worldwide. Their mission is creating financial security, and vision is to be the best at serving credit unions and their members. They offer more than 300 insurance, investment and technological solutions to credit unions through strategic relationships and multiple service channels.

CMG makes available, through credit unions, individual insurance, annuities, mutual funds, and other investment products to more than 8.8 million credit union members nationwide.

The business need involved the

• Existence of Multiple Claims Processing Systems with inefficient systems integration resulting in high maintenance costs.
• High claims processing time and cost (claims processing takes over 45 days) with low controls and manual adjudication of all claims.

Mastek collaborated with CMG to develop an Unified Claims Engine for all products and an Efficient Integration Engine for interfacing with multiple Policy Administration and Satellite Systems, which provided functionality to track claims processing time between stages for better claims processing efficiency.

Business Impact

• Claims processing time reduced from 20 days to five days and thereby delivering.
  • Operational efficiencies
  • Claims cost reduction
  • Customer delight
• Improved Time to market: 50–70 percent reduction in building claims system for new products
• Automated Adjudication of Claims and five percent reduction in Claims expense due to Fraudulent Claims detection
• The system achieved its ROI within 6 months
• Mastek won the Innovator Award 2007 for IT innovations in insurance

MASTEK’S FINANCIAL PERFORMANCE

The Third Wave strategy and other strategic inputs enabled Mastek to turn out a fairly good performance over the last ten years as detailed in Figure 1.5.

Mastek, over the first nine years, has shown a steady rise in both turnover and profits. This is a reflection of the consolidated figures for India and abroad operations.

In 2010, Mastek was hit by the global slowdown particularly from the markets of US and UK where a large part of its business comes from. The turnover and profits, which had peaked in the year 2009 at ₹964.97 crores and ₹141.16 crores respectively, fell to ₹721.9 crores and ₹67.72 crores in 2010 respectively. The year 2011 was even worse as turnover fell to ₹614.21 crores and there was a loss of ₹55.94 crores.

One other factor which contributed to the loss, was an exceptional item of ₹27.2 crore in relation to impairment of goodwill of Vector Insurance Services. However in 2012, Mastek made a comeback with increase in turnover to ₹739 crores and a profit of ₹50 crores. However, there was a slight dip in 2013.

Now the biggest challenge before Mastek is to regain the lost ground and reach the peak it had achieved in both turnover and profits in 2009.

Achieve High Return on Talent while delivering higher ROI

A vertical led approach and non-linear business model (where revenue tends to grow faster than manpower addition rates) implies that at a time when the Indian IT industry is facing headwinds in the form of supply-side constraints that include a limited talent pool and rising wages, Mastek can boast of industry-leading return on talent metrics that continue to grow every year as seen in Table 1.1.

 

If one scrutinizes the above figures it is evident that Mastek fares quite well when compared with large and middle tier Indian IT players and International players. On some counts, these players have fared better than Mastek. However, on other counts Mastek has fared better.

The CMD of Mastek when asked about the above opined that the differentiation is due to the business model followed by the respective companies. Mastek secures higher gross margins when compared with the others whereas on other counts it is similar or sometimes slighter lower than competition.

Achieve Transformation through products, solutions, services and people

Much of what Mastek has done and continues to do today, supports the efforts of their customers to transform themselves, their business processes, or the manner in which they compete and serve their customers.

IP Led Solutions: Mastek had built substantial expertise in a wide range of technologies and processes, made investments in developing its own intellectual property (IP) and has taken its capabilities to the international markets. Mastek’s IP solutions include:

1. Elixir^TM – Mastek’s solution platform for the global insurance industry is architected and designed to deliver maximum business impact that enables insurers to transform themselves into modern age players with significantly higher responsiveness and flexibility to effectively face the changed business environment that they operate in.2
2. In the Government space, Mastek begun implementing a solution based on an IP co-owned and developed in partnership with Thales UK to transform the way in which the UK Ministry of Defence (MoD) manages and schedules the global air movements of troops and cargo.

In addition to the above IP led products and solutions, Mastek is collaboratively working with the Central and State government of India in the areas of Tax Administration, Public Distribution, Social Welfare, Education and e-Governance Services.

It had invested heavily in imbedding a ‘solution culture’ in the organization through initiatives such as Design School and Technology Cell that aim to transform the way its clients do business.

GLOBAL SLOWDOWN, STRATEGIES AND FUTURE PLANS

Mastek has been an excellent company as can been seen by the milestones in its history and development (as given in Annexure -2) as well as the many awards and accolades it has secured nationally and internationally (as elaborated in Annexure-3).

Mastek was affected by the slowdown in terms of loss of turnover and profits being dependent on the American and European markets that were themselves severely affected by the global slowdown. Mastek has the challenge of regaining the lost ground, it had achieved in the year 2008–09 of turnover and profits of ₹964.97 crores and ₹181.53 crores respectively. The global slowdown reduced the turnover to ₹614 crores and contributed to a loss to ₹55.94 crores in 2010–11.

The following are some of the strategic steps that Mastek plans to take up in order to regain lost ground:

1. Intellectual Property Development: A solution provider has to create very strong differentiation through Intellectual Property (IP) development. This could be in a variety of forms - methodologies, frameworks, tools, platforms or packages, each calling for a different level of investment and a correspondingly different level of differentiation. At the heart of its strategy, it focuses on the Intellectual Property (IP) - led enterprise applications market and verticals based growth model.
2. Business Domain Expertise: While for a service provider, domain expertise is nice to have, but for a solutions provider it is necessity. To make the transition to a solutions provider, Indian firms must invest in building a cadre of domain experts in their target industries or develop strong partnerships with firms that can bring in that expertise. The domain experts will play a big role in providing consulting inputs to the customer, as well as act as a bridge between the customer and the development teams in solutions development.

   Mastek now plans to invest in the insurance sector, which has very good growth possibilities, and in Government Business and in Healthcare. It will also be examining other verticals in its domain and extend its coverage in the verticals in which it has developed expertise at an international level. Through these efforts, it could reach the position prior to the slowdown and move further ahead on its growth path.

3. Increasing Manpower: A solutions company is dependent on the quality and quantity of its manpower. As business had fallen, Mastek had reduced its manpower to 2905 from its peak of 4071. It now needs to add to its manpower to increase its business.
4. Global Markets: Mastek is already in the global markets particularly in the US and UK. There are huge pay-offs in being a Wave 3–Company as the industry can grow from its current levels of $10 billion to $100 billion or more. It must look for alternative markets not only to make good the loss in turnover and profits but also to exceed the best turnover and profits it had achieved in the past.

EMPLOYEE INITIATIVES

The performance of any IT company, besides strategy and technology, is very much dependent on the quality of its manpower. Mastek’s biggest asset is its people. Every individual is important and is inspired to produce extraordinary results. The company’s philosophy and HR policies aim at creating high levels of engagement and commitment, not only to realize business aims but to contribute to the larger social good as well.

Growth in Employee Strength

As on 31st March 2013, the company had a total of 3,214 employees, of which about 26% were based on-site while the rest were at various offshore locations. In the fourth quarter of the year under review, the company also decided upon a wage increase for its junior-to-middle level employees in the delivery, sales, and support functions. This increase in wages is to be implemented for both employees in specified grades at both offshore and onsite locations, with the average increase likely to be approximately 20 percent and 3.5 percent, respectively. The revised compensation has come into effect starting on the 1st of July, 2010. This initiative will enable the company to retain and attract the kind of superior talent that is necessary, given its focus on intellectual property (IP)-led and high-end IT solutions for global clients.

Mastek deployed its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is excellent talent. It continually undertook measures to attract and retain such high quality talent. As on 30 June, 2010, the company had 3,243 employees. The Virtual Bench, which had been created in 2009, ended in 2010 in view of the worldwide financial meltdown and downward growth outlook. Now the company has resumed recruitment of fresh talent.

Enabling Awesome Outperformance

Mastek has been focusing on enabling ‘Awesome Outperformance’ in every Company’s working. This initiative will lead to a strengthening of Team Synergies and creating a culture of collaboration and boundary - less teams.

Some of the key initiatives enabling outperformance are outlined below:

• Unleashing the Potential of Teams

  The Corporate Theatre Training Programs were a creative way to help teams review how they work and incorporate new methods of collaboration that help build team synergies.

• Strengthening Open Culture with enhanced Team Synergy

  Upward Feedback was introduced to enable Mastekeers to give constructive feedback to his/her manager for their individual growth and development.

• Engaging and leveraging the Top Performers through Prism Club

  The Prism Club initiative is for top performers to enable their growth and development.

• Building Engaged Teams

  Employee Engagement continues to be the key focus area in Mastek. Mastek Engagement Survey held recently in July 2013 received 88% participation and the survey results indicate a clear upward movement in the employee engagement scores.

• Fun and Joy @ Mastek (Fun, Joy, Health, Wellness and Sports Initiatives)

  Mastek’s Fun and Joy celebrates the spirit of Mastek with various events throughout the year. The idea is to rejuvenate and engage Mastekeers. The enthusiasm and zeal are the best on display during these events.

• Strengthening the Culture of Recognition

  Individuals/ teams that outperform need to rewarded in a timely and effective manner. Towards this goal Mastek has strengthened and integrated the Awards framework.

  To create a lasting culture of recognition, an ‘Expressions Week’ is conducted where different events related to recognition are run throughout the week. Some of the highlights of this week are ‘Wall of Fame Day’, ‘Wing beneath My Wings’, Technology Galaxy’ and Attitude Awards.

• Learning and Development

  Onsite learning was one of the focus areas for L&D team last year. The team initiated Learning Champion Approach which worked very well. At every onsite location, champions were identified and the constant dialogues helped in aligning the webinar offerings with business.

  Last year saw a huge involvement of employees in various L&D initiatives in terms of participating and conducting trainings for fellow Mastekeers.

• Pay for Performance

  Mastek lays a great emphasis in recognizing meritorious performance and for structuring the compensation and benefit programs accordingly. Compensation decisions are driven by market benchmarks, skill proficiencies and individual work performance; the effort is towards differentiation and better engagement of key and critical resources.

CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE

While manpower is critical to an IT company’s growth and prosperity, Corporate Social Responsibility (CSR) and Corporate Governance have to be given due importance.

CSR is one of the pillars of good governance for any business enterprise. It is an integral part of business strategy and should permeate throughout the organization and across supply chains. Mastek takes its corporate social responsibility very seriously. They believe that a business enterprise is part of a wider community, and must serve the interests of the under-privileged and disadvantaged sections of the community as much as its obligations to its immediate stakeholders.

Corporate Social Responsibilities include:

• Environment Protection

Within its workplaces, Mastek uses furniture and equipment products that are standard and branded, and which comply with environment-friendly specifications. Computers no longer in use at its workplaces are donated to charity organizations.

Gardens, plants and greenery are essential elements of the company’s facility planning. Mastek ensures proper upkeep and maintenance of the surroundings of its workplaces.

Mastek is a part of the Planet Partner Program initiated by Hewlett-Packard (HP) for environmentfriendly recycling solutions for printer cartridges.

The Mastek Foundation also extends support and spreads awareness about issues relating to the environment.

• Fair Business Practices

Mastek has been awarded the prestigious Jamnalal Bajaj Award for Fair Business Practices in 2005. The award, instituted in 1988 recognizes and applauds efforts of business houses and business associations with an exemplary record of practicing and promoting fair business practices.

Mastek conducts various CSR activities through the Mastek Foundation. The foundation’s mission is to inspire communities’ institutions and individuals to make a difference through ‘Informed Giving, Responsible Receiving’. (See Figure 1.7)

The foundation’s broad initiatives include:

1. Payroll giving

   Mastekeers are sensitized to community issues through various activities of the Mastek Foundation. Under Payroll Giving, a Mastekeer can opt to have certain portion of his or her pay deducted at source to fund an NGO or a cause.

2. Employee Volunteering

   Mastek Foundation enables Mastekeers to participate in community volunteer work. Some of the activities that happen regularly include blood donation, clothes donation, book donation and teaching and mentoring underprivileged children.

3. Marathon

   Mastek Foundation supported the NGO Kherwadi Social Welfare Association (KSWA) in the annual Standard Chartered Mumbai Marathon in January 2013. 100 Mastekeers participated with lot of enthusiasm, spreading the message of giving through ‘Informed Giving, Responsible Receiving’ placards.

4. Tree plantation drive

   A group of Mastekeers participated in plantaion drive in association with NGO Hariyali.

Corporate Governance

Corporate Governance is the relationship between all stakeholders and the company-shareholders, directors and the management. It is the mechanism through which individuals are motivated to align their behaviour with the overall corporate good.

One of the new initiatives Mastek has taken in this regard is the setting up of a Governance Committee by the Board of Directors to deal exclusively with governance matters. Its primary role is to draft and review new policies such as the Whistle Blower Policy and codes of conduct for directors and senior management.

Regulatory Compliance

• During the past three financial years, there has not been a single case of non-compliance with income tax, sales tax, central excise, customs duty, company law and other regulations by Mastek.
• Mastek was among the first companies in India to start issuing profit and warning guidance to investors every quarter. They also conduct analysis meets every six months and publish the questionanswer exchange with the Management on their website.
• Mastek’s board of directors has constituted an Audit Committee and a Share-Transfer-cum-Investor- Grievance Committee to protect the interests of investors.

QUESTIONS FOR DISCUSSION

1. Mastek’s management had to change its strategy in the light of the economic slowdown. What were those steps?
2. Can this innovative and focused IP route take Mastek to revenues of $1 billion as opposed to the traditional Second Wave services?
3. What are the future plans of Mastek and should they stick to their existing domains or move into other domains? What would those new domains be?
4. With its excellent performance over the years, is Mastek a hot target for a takeover? What steps must the company take to prevent such an eventuality?
5. Companies in the IT industry face the problem of high attrition figures. How is Mastek able to attract, motivate and retain employees when compared to other IT companies?

END NOTES

1. Additional details on Elixir4: http://www.mastek.com/solutions/elixir4.html