Jaithirth “Jerry” Rao, the part-time poet who added a dash of colourful marketing to the said world of bankers as Citibank’s India head in the 1990s, is set to end another adventurous chapter in his career – that of adding BPO to an IT firm and selling it to a global giant for handsome gains.
More than a year after Texas-based software services’ giant EDS, took a controlling stake in MphasiS BFL Ltd, Rao, who pioneered a business process outsourcing (BPO) unit under the company’s software umbrella, is set to divest his position as chairman.
After a slowdown hit the IT industry in 2001, Rao took charge of what was then BFL Software Ltd and started MphasiS, its back-office unit.
Using a common sales engine to add BPO work to IT – something largely untried then, Rao blazed a new trend. That offered a unique positioning to the mid-sized company amidsts titans like Infosys and Wipro.
Electronic Data Systems (EDS), trying to match the local giants, eventually snapped up MphasiS in a deal in which private equity firm Barings found solid returns. EDS is now bringing in a new line of leaders to transform the company into a larger entity.
Jeya Kumara, a former Sun Microsystems executive, is the new Chief Executive Officer (CEO). Kumara, who was vice-president, Asia-Pacific, for Sun Microsystems, has also managed Sun’s $5 billion (Rs 20,000 crore) services’ business. Rao, who started his next entrepreneurial role as a wine producer, will move to the role of chairman of EDS Asia Pacific Advisory Board.
Michael Coomer, who used to be the executive vice-president of EDS Asia-Pacific, will replace Rao as chairman.
According to industry sources, the top-level reshuffle is being set in motion to prepare the company for the next level of growth.
MphasiS, whose share price has taken a beating, faces heated competition IT majors as well as players like Patni, i-flex solutions and Tech Mahindra. “Kumar has the reputation of building and looking at new business areas from his previous stints in Apple Computer and National Semiconductor corp.,” said the Bangalore-based CEO of a medium-sized IT company.
Unlike competitors such as TCS, Infosys and Wipro, Mphasis has not been winning multi-million, multi-year deals in the past year and has been relying on deals coming through from its parent EDS. Also, the stock is trading at Rs. 274 and has lost 13.4 per cent on the BSE compared to a year back.
“The EDS top brass in its recently announced results also indicated that they were laying special focus on growing business delivery capabilities ,” said Manik Taneja, IT analyst Emkay Share and Stock Brokers.