Tech Mahindra CEO and MD CP Gurnani said that the IT services firm's clients have not refused a price increase for their projects despite facing macroeconomic challenges. Gurnani further said that by working as 'partners' the company has been able to come up with strategies to overcome financial constraints their clients may have.
He was speaking to journalists on the sidelines of the company's Investor Day in Pune on March 3.
“We think of ourselves as partners to our clients and not vendors. We went to about 100 clients last year saying things are becoming tougher. Decisions may have been delayed by a few months, but every client has respected that our costs have gone up. We sat across and said if we can only spending Rs 100, let’s try to find a way out to manage in that budget,” Gurnani said to the media on the sidelines of the company's Investor Day in Pune.
“Nobody has denied price increase to us on the account of inflation; because it’s a partnership. We may close down on a few projects due to budgetary targets but those are different clients,” he added.
Gurnani also said that he is not worried about a large portion of vendor consolidation deals going to certain larger IT services peers because Tech Mahindra has a strong grip on deals coming from the niche technologies in which it specialises. This comes at a time when other Indian IT service providers are increasingly talking about vendor consolidation and cost-takeout deals as clients tighten their tech budgets.
“Certain cases for us are much more stronger than many other players in the industry. Where our chances to win are stronger, obviously we like to play making our clients more successful. Hence I don’t think we are impacted by not getting vendor consolidation deals,” he said addressing queries on vendor consolidation deal wins.
During the company's investor presentation, Gurnani also said that digital innovation and business transformation remain a "big conversation" and area of interest among its clients.
Two of the largest luxury brands in the world, two of the largest retailers and two large telcos have signed with Tech Mahindra lately, the company said.
On telecom business
Tech Mahindra has been going big on 5G technology and related services. Gurnani highlighted that while 5G is still a work in progress, the company has been able to deliver $1 billion in revenue in 5G per year.
Known predominantly for its telecom vertical, the company is also trying to diversify and change the portfolio mix of segments over time given the changing regulatory environment and other challenges coming in different geographies globally in the telecom space.
At present, about 41 percent of Tech Mahindra’s business is from telecom and balance 60 percent from enterprise business.
“We are number 3rd on growth metrics (as per top quartile growth since FY2020). We are going strong, but we have hit a few speed breakers. Tech Mahindra was primarily into telecom. We have reached 90 countries and work with the top 2-3 telecom players in each of these markets. It came with its own set of challenges. Over a period of time we have worked to change the portfolio mix,” Gurnani said.
“Resilience for us come from the fact that when our telecom clients want to expand globally, we are already present in 90 countries,” he added.
Will generative AI be a speed breaker?
Business Process Services (BPS) has been one of the company’s strongest growth engines for the company over the last two and half years, Gurnani said.
BPS year-to-date has added $700 million in TCV, which has been the highest ever, said Birendra Sen, Business Head, Business Process Services at Tech Mahindra. Within BPS, there are three verticals with over $100 million runrate mark.
Speaking on business getting disrupted by ChatGPT and generative AI, Sen said, “Consider generative AI is like a six-year-old, it has a lot to learn. It will learn from humans. By the time it comes to defining work, future of work there’s time to go. In the near term we don’t see any impact on business, particularly on BPS side. In fact, there’s an upside. Most generative AI bots right now needs human in the loop to train, monitor, correct and disciplined.”
Tech Mahindra is already seeing traction on the hi-tech side, and are engaging with large clients.
Growth in engineering and metaverse
About 85 percent of 5G devices in the US are assured by Tech Mahindra. The company also helped a leading OEM in Europe to report 250 percent growth through seven major programmes engineered end-to-end by Tech Mahindra.
In the past few months, the company expanded its global delivery channels. Tech Mahindra also won the first metaverse development engineering programme recently.
It currently has 70-80 active metaverse deals, Jagdish Mitra, chief strategy officer and head of growth at Tech Mahindra had said to Moneycontrol in February.
Tech Mahindra is also in the process of engineering the first cognitive city in the world.
On Gurnani's succession plan
Even as speculation is rife on CEO succession at Tech Mahindra, Gurnani declined to comment on the process or expected timeline of appointment. Gurnani's term will end on December 19 this year.
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