Management at HP-controlled Indian SI, Mphasis, is certainly not letting the grass grow under its feet. The still separately (Mumbai) quoted company has been drumming up business outside of its parent on account of the fact that the HPES (enterprise systems) channel – which accounts for two-thirds of Mphasis’ revenues – “did not experience volume growth” during the quarter.
Indeed, revenues from Mphasis' non-HP clients grew by nearly 11% qoq, vs 4% for the whole business. As a result, Mphasis turned over $282m in the quarter (to 30th April), though operating margins were down yet again, to 16.5%. This was despite a slight qoq uptick in offshore pricing to $20 p.h. for both Application Services and ITO Services. However, Application Services pricing still remains 13% lower than the same time last year.
You see, the truth really is out there – you just have to know where to look for it. As I said last week (see No more ‘miracle margins’ at HP Services), there seemed to be a disconnect between HP’s services margins and those of its peers but it was hard to see under the covers. Well, Mphasis truly is under the covers and, as HP Services’ Indian delivery arm, it should remain a useful proxy for what’s really happening in HP’s services business.