Highlight Report

With its NxT Digital acquisition, Mindtree aims to orchestrate connected enterprises

July 2, 2021

As the world entered 2020, it had no choice but to embrace the unwelcome guest, the COVID-19. While the onset of COVID-19 deterred the business-as-usual work scenario, it also acted as a blessing in disguise for the businesses. Industries across the globe started to accelerate their focus on reinventing their operations towards achieving the strategic imperatives that will help them connect the factory floor with the sales and financial transaction systems at the heart of every organization. Internet of Things is one of the technologies that play a significant role in helping the factories achieve the goal mentioned above. Enterprises are always keen to work with partners who can bring in the holistic industrial solution that includes the gamut of services from upstream consulting to implementing the solutions at scale and helping maintain them. Given this situation, Mindtree has planned to acquire L&T’s NxT Digital business for INR 198 Crore.

What is special about acquiring NxT Digital?

Mindtree’s expertise in IoT is across the entire IoT value chain, starting from platform and device Engineering, applications management, to operations and support. The company positions its IoT services as “Edge to Experience” to provide Phygital experiences. Moreover, Mindtree is also a leading provider for Bluetooth IP and Engineering (Co-Created 4.x & 5.x Bluetooth Standard). Mindtree’s acquisition of NxT Digital will help it capture opportunities in the IoT and Industry 4.0 market by leveraging the capabilities of NxT Digital Business to cross-sell and create holistic solutions. Secondly, the acquisition will bolster Mindtree’s vision to leverage existing digital strengths and aim to become a ‘Go-to business transformation partner’ for clients. As shown in Exhibit 1, in essence, the acquisition strengthens Mindtree’s position to reimagine the processes from the “Edge to Experience.”

Exhibit 1: NxT Digital acquisition will pivot Mindtree’s vision to provide “Phygital experience”

Source: Mindtree Technologies, 2021

Nxt Digital will bring in domain capabilities and will propel Mindtree’s IoT business beyond manufacturing

One of the key aspects of NxT Digital acquisition is to augment Mindtree’s IoT capabilities with the domain knowledge and Industry 4.0 credentials of L&T. Secondly; while the NxT insights platform currently supports Manufacturing, Mining, Engineering, Construction and Utility industries, the acquisition provides a roadmap to support transportation, logistics, retail and healthcare. Combining enhanced capabilities for the core products, the scale of deployment, and the Go-to-Market synergy between Mindtree and NxT Digital will help Mindtree drive its “Edge to Experience” value proposition to its customers. In addition, NxT Digital will play a critical role in elevating Mindtree’s role as a strategic partner for IoT by helping in (i) conducting strategic design thinking workshops, (ii) driving data intelligence, and ((ii) integration with IoT cloud platform. Exhibit 2 provides a view of NxT Digital’s portfolio.

Exhibit 2: NxT Digital’s portfolio will elevate Mindtree to an end-end-end strategic partner role in IoT services

Source: Mindtree Technologies, 2021

The Bottom Line: Mindtree can elevate itself from a partner to an orchestrator of connected enterprise with Nxt Digital acquisition

A smart factory strives to reinvent its production by leveraging the right combination of technologies to improve its working with connected equipment, people, and processes. According to HFS OneOffice Pulse Study in 2021, over 60% of global enterprises want to improve their customer experiences. However, as the enterprises work towards this grand vision, they cannot achieve success unless they work with a holistic partner who can bring in the capabilities that include the upskill domain-specific consulting skills and implement solutions at scale. Nxt Digital’s acquisition should help Mindtree position itself as a strategic orchestrator of the connected enterprise.

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