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MBT set to drive into used car segment

Kripa Raman

Recently in the UK

MAHINDRA British Telecom (MBT) is planning a joint venture with the US-based car hire company, Avis, for the latter's e-commerce venture for its used cars.

The joint venture which will be based in the UK, will develop and deploy the help and product desk on the Net through which Avis cars will be sold in Europe.

The car hire company works in such a way that 20 per cent of its car-fleet must be shown in its records as assets while the rest may be shown as leased and returned to the car seller.

Avis would have to sell this 20 per cent of its fleet, which would make for huge business. Avis has around 2,40,000 vehicles in Europe and 20 per cent of these make a business that runs into tens of millions of dollars, according to Mr. Melvyn Burgoyne, Head of Business Development.

MBT officials said that the company was working on two other new proposals.

MBT, a joint venture between Mahindra & Mahindra and British Telecom, has drawn up a strategy for itself to expand business across the global market.

The company, which was started as a software development centre for BT, gets 75 per cent of its revenues from BT-related work.

In fact, 80 per cent of BT's revenues work on systems developed and maintained by MBT. As part of its new globalisation strategy, the company will concentrate in particular on the UK and European markets.

Its strategic focus will be in the vertical sectors of utilities, telecom companies and the public sector. This will be in keeping with the expertise already developed within MBT while catering to the requirements of BT.

Apart from this, there will be a tactical focus on conversion and migration work as well as work on European Monetary Unit-related projects.

Within these three vertical sectors, MBT will provide a slew of services ranging from e-business work to fraud management, CRM, embedded systems and the like.

With respect to the UK, while the size of the market was only one-tenth of the North American market, it is still large, Mr. Burgoyne said.

The growth projected after two flat years is around 10-12 per cent for the current year, with Europe growing even faster and providing a market to be worked upon.

In the UK, there is a shortage of skilled human capital. Additionally, there are increasing international and globalisation requirements, privatisation and deregulation pressures.

``The UK culture being conservative, it is difficult to win customers,'' Mr. Burgoyne said.

MBT is tackling this market through two different strategies. The first is the concept of the Non-Executive Director or Business Advisor -- the greybeard with the contacts who bring gravitas to the organisation.

``MBT has retained four of them, of varying backgrounds. We talk industry to our clients and not technology; clients want to know how the technology will work for their industry and not have technology explained to them.''

Among the business advisors are Mr. Tim Howden, who has worked across different industries and is advisor to as many today, and Prof. Robin Turrell, whose background includes a stint with World Bank.

The other strategy, which MBT claims is meant to make best use of the outsourcing practise in the UK, is the formation of a division within MBT called `Ist Contracts'.

Contracting in the UK appears to be an established way of operating in the UK, and has not the pejorative connotations that the phrase body-shopping holds in India, Mr. Ghana Pendse, Corporate Manager at MBT, said.

There are apparently around 1,30,000 Information Technology workers in the UK who work on a contract basis.

1st Contracts will specifically supply local (UK-based) contract staff to MBT. This is being seen as a strategy by which to introduce MBT to a market that is more comfortable with contract workers, according to BT officials in charge of the division. The plan is to arrange for contract workers for the non-BT market as well.

Many clients are not used to the offshore Indian model of working, MBT officials said. ``So, we offer them the soft option using contractors and later, we introduce MBT workers and still later, take the work offshore.''

MBT's core itself is moving away from the body-shopping model that it was earlier associated with, they added. But the company needs a flexible vehicle through which it can offer some special short-term skills that may be required which contracting makes easy.

MBT's income for the year ended March, 2000, was Rs. 240.32 crores (Rs. 175.18 crores), and profit after tax amounted to Rs. 63.03 crores (Rs. 55.25 crores).

The company said that investment in R&D had dented profitability for the year. Income for the year 2000-2001 is expected to double, according to company officials.