Mphasis, the India-based offshore services firm majority-owned by HP, continues to see business from its parent decline. Revenues in Q1 (to 31st Jan.) from the HP channel were 4% lower qoq (constant currency), at Rs8.1b (c.$160m), but the decline was just offset by Mphasis’ direct business, which grew by 14% qoq to Rs5.8b (c.$115m), bringing headline revenue growth for the whole company to just a shade under 1% qoq. HP business now represents 58% of the total, down from 62% in the prior quarter.
Mphasis' operating margins improved by 30bps over the quarter, to 15.0%, but were fully 3 points lower than the same period a year prior. The quarterly margin improvement was more to do with SG&A efficiencies, as gross margins actually dropped 20bps, to 23.6%.
Mphasis is far more dependent on Time-and-Materials work than major offshore peers, with almost 90% of its projects thus billed. But it seems to have its engines firing on all cylinders, driving utilisation levels broadly in line with peers. You get the impression that Mphasis is a well-run shop, despite – rather than because of – its majority owner.