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Mohit Joshi’s appointment as Tech Mahindra CEO will bring BFSI and healthcare expertise: Industry experts

The company has to shed its over-reliance on the telecom and enterprise businesses, and capture large cost takeout deals, said analysts.

March 11, 2023 / 08:14 PM IST

IT industry experts and analysts gave a thumbs up to the appointment of Infosys president Mohit Joshi as the CEO and MD designate of Tech Mahindra. As someone who’s closely worked with Infosys CEO Salil Parekh and has expertise in the BFSI and healthcare space, Joshi is expected to re-energise the business, industry experts said.

According to analysts, Joshi’s experience of over 22 years with the IT services behemoth and his involvement in executing Infosys’ transformation as part of its leadership team over the past few years, will help him think strategically on winning large deals for Tech Mahindra, deals that usually go to the top two or three companies like Tata Consultancy Services (TCS) and Infosys.

Joshi resigned from Infosys on March 11, and will be taking over the reins of Tech Mahindra from current CEO and MD CP Gurnani on December 20.

The Mahindra group leadership was keen to bring in some fresh thinking from outside, said Phil Fersht, Founder and Chief Analyst of HFS Research.

“Mohit Joshi has been coveted as a potential CEO in the services industry, and Tech Mahindra is a superb opportunity, especially as Salil Parekh has over four years remaining on his Infosys contract,” he told Moneycontrol.

Ray Wang, founder and principal analyst, Constellation Research concurred, "Joshi is one of the large deal architects at Infosys. Like Ravi Kumar S, these are the folks that have help make Infosys successful."

"While Salil Parekh has a deep bench, these two were always considered next in line for CEO so when Salil’s contract was renewed, competitors have been looking for good leaders that understood big deals," Wang told Moneycontrol.

Fersht added that Joshi has a proven track record of growing business units and is well respected both within Infosys and by its banking and financial services customers as a strategic thinker and strong delivery leader.

“He brings vital industry experience to Tech M outside of its traditional telecoms mainstay, and will bring fresh energy and ideas to the firm,” Fersht said.

According to Pareekh Jain, Founder and CEO, EIIRTrend, Joshi will be bringing his experience as part of Infosys’ transformation leadership team, both under former CEO Vishal Sikka and now Parekh. ``They transformed Infosys in the last four-five years,’’ he said.

As President at Infosys, Joshi is responsible for the Financial Services, Insurance, Healthcare, and Life Sciences businesses. Additionally, he is the Chairman of Edgeverve Systems, wherein he leads the company’s software business which includes Finacle, Infosys’ global banking platform. He also led sales operations and effectiveness for Infosys and has executive responsibility for large deals across the firm.

Tech Mahindra needs a strategy refresh

Analysts are batting for Joshi as they think Tech Mahindra needs a strategy refresh and needs to expand beyond its stronghold of telecom and CME (Communications, Media and Entertainment) verticals. Joshi fits in beautifully as he comes from the BFSI and healthcare domains.

“Tech Mahindra needs a strategy refresh. They have the lowest margins among Tier-I IT companies. Their growth is not in the top quartile and they are not winning large deals. From that perspective, bringing someone who has performed in a Tier-I firm is a good choice,’’ Jain said.

He added, “Apart from that, he was heading BFSI, healthcare, and the Europe market --- all segments Tech Mahindra is not strong in compared to other Tier-I firms. He was also a part of the overall sales transformation at Infosys. That experience will be very helpful while going for a strategy refresh; especially given that Nasscom has said that overall growth this year will be similar to last year or lower.”

Tech Mahindra will need to capture large cost takeout deals in the current environment to grow, Jain added.

Tech Mahindra has a lot of opportunities to build up its analytics, automation, and AI practices -- areas at the core of where digital is headed, said Wang.

"The shift to more focused industry plays need to match the ability to build offerings that are more high margin. This isn’t an easy play to make, but you can do it with a large deal mentality," he added.

During the company’s Investor Day on March 3, Gurnani said that while Tech Mahindra is predominantly known for its telecom vertical, the company is also trying to diversify and change the portfolio mix of segments, given the changing regulatory environment and other challenges in different geographies globally in the telecom space.

Currently, around 41 percent of Tech Mahindra’s revenues are from telecom, and 60 percent is from its enterprise business.

The company is also betting big on its product and platform business, which Gurnani estimated will become a $1 billion revenue vertical in the next three years.

According to Forrester Research India’s Head of Research, Ashutosh Sharma, Joshi will need to re-energise Tech Mahindra, which has a lot of latent potential and capabilities in the manufacturing domain courtesy its parent, the Mahindra group, especially in the automotive space.

“Tech Mahindra has not capitalised on that as much as TCS has. Joshi will have a lot of work to do,” he told Moneycontrol.

Sharma added that Tech Mahindra has been strong in Telecom and manufacturing, but there are areas where it’s not among the leaders.

“They have grown, but not at the fastest pace. Joshi will have to focus a lot on navigating through the current environment, which presages tough times ahead for the industry. Though IT services companies benefit from downturns as well,” he added, referring to the current global uncertainties caused by inflation, impending recession in the US, the Russia-Ukraine war, etc.

Debangana Ghosh
Debangana Ghosh