Jack Cronin: Yes, the Board approved a 500,000 share repurchase program. So yes, clearly, our goal is to buy back some of our shares.
Timothy Call: terrific price. So an acquisition one way or another, but you know your company well and know how good it is. So that makes sense in the interim. Thank you very much.
Vivek Gupta: Thanks, Tim.
Operator: Our next question comes from the line of Marc Riddick with Sidoti. Please proceed with your question.
Marc Riddick: Hi, good morning everyone.
Vivek Gupta: Hi, Marc.
Marc Riddick: Michael, welcome aboard. Looking forward to working with you going forward.
Michael Fleishman: Thanks, Marc.
Marc Riddick: So I wanted to talk a little bit about some of the basics. The way you talked about the pacing around the client demand slowdown. And then I was wondering if you could talk a little bit about some of the things that you’re seeing maybe around bill rates and pricing dynamic of what you are working with? And then also if you could sort of give a little bit of color around whether or not that demand — are you getting the sense of that demand as a matter of just delayed activity by clients or projects that are going away for a period of time?
Vivek Gupta: Sure, Marc. Let me — there are multiple sort of mini questions embedded in your questions. Let me try and address those one by one. So on the build rate front, we’ve actually not seen any major, what shall we say, pressure at this point in time. In fact to the contrary, over the last few quarters we’ve been able to steadily increase our bill rate and I’m talking more on the staffing side. And the pricing is always a function of what is the market command for that kind of offering and also what is it that we need to pay to our resources. So we’ve been able to maintain the gross margins there and manage our pricing accordingly. So that’s how it is. In terms of demand, it’s slightly different between staffing and data and analytics.
And maybe I’m going to give Michael a chance to talk about the data analytics part in a minute. But on the staffing side, there is actually a pretty close correlation between the state of the economy and the demand on — for Staffing. And the time difference between the two €“ the reaction time is actually pretty small. So there is — just a couple of quarters ago there was the worry about the recession was extremely high. It’s still there, but it’s to a lesser extent right now. And that’s probably what’s going — what’s maybe easing the drop in the demand that we saw. So we are hopeful that we will see a pickup in demand over the next few quarters. Of course, nobody has a crystal ball, but at least early indications are that’s what’s going to happen.
So that’s all on the staffing side. And on the data analytics side, the dynamics are slightly different. So Michael, would you like to comment on that?
Michael Fleishman: Sure. So while a recession or rather, I should say, the fear of a potential recession is causing some customers not so much the slowdown, but to be a little leery until they see the actual impacts to their bottom lines. So we are seeing some small percentage budget cuts into customers’ IT budgets in 2023 over what they had in 2022. That being said, digital transformation will not be impacted by a recession for a couple of years at least at a minimum. That spend is still ongoing and a lot of our customers have locked in a multi-year spend budget for their digital transformation initiatives, whether you’re talking application modernization, legacy modernization or data modernization, all of which play into digital transformation.
What we have actually seen is, because of the issue around attrition and the ability to retain IT professionals as well as the inability to fulfill demand for IT professionals that we experienced in 2022, it’s actually driving rates higher versus having to cut rates in the digital transformation space. People are having to pay more to get the same skills that they had to pay less for in previous years. And it is because the attrition is so high. The average attrition across IT services in 2022 was 25.2%, for example. That’s actually one of the competitive differentiation that Mastech has over the market because our attrition in 2022 was 9%. I’ve been waiting for an opportunity to say that. So that’s what we’re seeing in the D&A space. I hope that answers your question.
If not, I’m happy to go into more detail.
Marc Riddick: No, that’s certainly helpful. Thank you. And then, I was wondering if you could talk a little bit about and you touched on this already as far as the timing of targeting acquisitions and that’s certainly understandable given the timing of you joining the firm. I was wondering if we sort of just confirm I would imagine that the prioritization remains within D&A. But I was wondering if you could sort of talk about just overall prioritization of acquisitions and whether that has changed at all and/or if you have any particular views on just the general pricing environment that’s out there that you think you might be able to take advantage of?
Vivek Gupta: So Marc, I don’t think there’s any change in our thinking, our strategy regarding the acquisitions. We will probably fine tune it. As I said, just giving Michael a little bit of time to settle down and then we’ll fine tune our requirements and initiate the search. So right now there is really no change to what our thinking has been. Our acquisitions will be on the data analytics side and not on the IT staffing side. That’s something I’ve said multiple times before and that remains unchanged.
Marc Riddick: Okay, great. And then just to confirm, so if you are finishing the year with the headcount at just over 1,200, are there any thoughts as to sort of where you would like that to be through the year or any thoughts at least in the near term as to where that can go?
Vivek Gupta: So Marc, obviously, the plan is always to grow that number and not let it stay at this number or reduce. And that’s what the entire organization is working towards. But as I said, it’s difficult to give a — first of all, we don’t give any guidance it’s also — directionally also it’s difficult to predict how the next few quarters are going to pan out. But we are encouraged with what we have seen in the first few weeks, not a dramatic increase in demand, but better than what we saw in Q4. So that’s sort of directionally tells us and we are hopeful that we will be able to grow over the year.
Marc Riddick: Okay. And then the last thing for me, I was sort of curious as to whether or not you’ve seen any — were there any differences in behavior or any stand up either they are negative when it comes to client verticals. Are there any particular groups that maybe were a little more cautious than others or vice versa? Thank you.