Acquiring capability
The next step was to acquire more capability. Gupta says Mastech Digital decided to focus on analytics first, with the idea of taking on artificial intelligence next, because of the growth potential of those two areas.
The company hired an investment banker, and Gupta and his team reviewed four dozen potential targets for acquisition.
“We were looking for that perfect fit, a company which is not just going to come on board and sit on an island separate from the IT staffing,” Gupta says. “We wanted a company which will integrate nicely with what we are doing.”
After six months of evaluation, the company decided on the Canadian company InfoTrellis. Due diligence took another six months. Mastech Digital completed the acquisition in July 2017, paying $55 million for the data management and analytics company.
The purchase sparked interest from investors, which Gupta says helped validate their plan.
Gupta also had acquisition experience he could call upon.
“Right from the beginning we were very clear we are acquiring InfoTrellis for multiple reasons: 1) their capability, 2) their balance and people and 3) the culture. We wanted to make sure we did not kill these three,” he says.
Too often, people try to make the acquired company resemble the acquiring company, and then you no longer have the company you paid so much money for, Gupta says.
To avoid this, Mastech Digital looked at InfoTrellis as a business unit. It had its own salespeople, delivery experts, etc., but it came under Mastech Digital’s HR, finance, marketing and legal teams. Gupta used external consultants to help create a tight 90-day plan.
InfoTrellis is more project focused, while Mastech Digital is staffing focused. Over time, the interaction between the two will grow.
“(If) the plane is flying, you can’t just stop it and fix everything and take off again. You do it in a way which has the least disruption and the customers don’t feel that there is a huge change happening in the organization,” Gupta says. “What we did in the first 90 days was to let the business unit flourish. The second phase of integration, which is a longer phase, is cross-selling.”
Next steps
As a result of the acquisition, Mastech Digital has 500 more employees than when Gupta became CEO. Of the more than 1,600 total, about 250 are in Pittsburgh; half of the new employees are from InfoTrellis, while the rest came through organic growth.
In three years, Mastech Digital’s annual revenue has grown from $130 million to about $180 million, and the company’s customer base and footprint are more global. It also has two offshore centers in India, thanks to the InfoTrellis acquisition.
“If you want to have offshore centers, you need to have more than one so that you’re able to have a business continuity plan,” Gupta says. “The centers also have been souped up. We’ve moved to better locations. We’ve doubled the capacity. We’ve hired more people.”
Mastech Digital will look to grow its data analytics offerings — organically and possibly through acquisition — and eventually turn to artificial intelligence. However, the line between the two is blurring, so a future acquisition could straddle both business lines.
“As we speak, we are preparing our strategy for the next three years,” he says. “We will continue to invest on the digital side over the next few years. Building new practices in-house organically and looking at the right kind of acquisitions which can help us complete or extend our offerings or maybe deepen the capability that we now have in a couple of specific areas.”
Takeaways:
- A fresh perspective can generate constructive disruption.
- Don’t destroy what attracted you to an acquisition in the first place.
- Transformation is bolstered by a homogeneous culture.
The file:
Name: Vivek Gupta
Title: President and CEO
Company: Mastech Digital
Born: Ambala, India
Education: Bachelor’s degree in technology, Indian Institute of Technology in Delhi; advanced management program, Wharton School of the University of Pennsylvania
What was your first job? I joined my first job straight from college. Zensar Technologies came to India and hired me. I didn’t leave for three decades. The first nine years were in India. Then I was sent to the United Kingdom to start a new business that involved IT services outsourcing. I came to the U.S. in 2002.
You’ve spent at least a decade on three continents. How has that changed your perspective? I’m actually a student of cultural differences. I read up on it. I talk about it sometimes. I write about it and do workshops. It’s very dear to me.
Most global organizations have teams composed of citizens from different countries, and cultural sensitivity can make such a big difference in making sure that the entire team moves in the same direction. It’s so easy to make mistakes if you’ve not been sensitized to the cultural differences.
Where might someone find you on the weekend? You might find me in my basement tinkering with my audio and video system because I’m a hi-fi technologies buff. I’m constantly tweaking what I have in my music system and home theater.
You’re a fan of gadgets. What has caught your attention recently? It’s such a fast-moving place. Whatever we see today is obsolete the next day. But I’m always on the lookout for what could be coming around the corner. I’m looking forward to the 8K projection system.
Then, of course, augmented reality and virtual reality sets are becoming so pervasive now. VR and AR aren’t just personal gadgets, I think it’s going to make a difference in business as well. My eyes were opened to this technology when my one daughter decided to virtually make a career out of AR and VR.
