Inside Tech Mahindra’s restructuring game plan

Mohit Joshi, CEO, Tech Mahindra

It’s been less than a month since Tech Mahindra’s new organisational structure came into effect. In his first address since taking over the reins of the company fully, Mohit Joshi, CEO and MD said that the older structure was hierarchical, bureaucratic, and siloed, which made him work on streamlining the delivery units of the company to drive sales improvement.

Speaking at the company’s earnings conference on January 24, for the quarter ended December 31, he shared that the company is working on a three-track strategy to bring the business on track amidst continued macroeconomic challenges and the company’s over-dependency on currently volatile sectors like telecom and communications, media and entertainment (CME). CME accounts for nearly 40 percent of the company’s revenue.

Earlier this month at the World Economic Forum, during his first media interaction since becoming the CEO, he told Moneycontrol that the company is working on three track plan which includes a plan for revenue, a plan for margins and a plan for the organisation at large.

Also read: MC Pro Quicktake: Tech Mahindra’s Q3 results hold out hope for investors

“The overarching goal that we have in this space is to make the investments and the changes to maximise on long-term growth, drive a culture of performance in both delivery and in sales,” Joshi told media at the earnings conference.

He said that the company will be sharing more detailed updates on strategy, impact of restructuring and hiring plans in April.

Sales and delivery improvement

Joshi had simplified Tech Mahindra’s previous structure of 12 sales units to just six units. These six focussed units include Americas Communication, Americas Technology Media, Americas diversified, EMEA (Europe, Middle East and Africa), APJ (Asia Pacific and Japan), and India.

“We have also eliminated the dotted lines. We have delayered the hierarchy for better synergy and for accountability. The portfolio companies are also being integrated under the respective business units for better realization of the synergies,” he said.

Joshi added that his team has scanned through the client portfolio to reprioritise and streamline how they allocate time and investments across clients.

“What we found was that there was a lower investment focus on our top accounts. And I think this has resulted in our not realizing the true value of these very significant clients that we have. At the same time, we have found ways to substantially improve and to better utilize our efforts in engaging across the smaller clients as well,” Joshi said.

He added, “These actions are going to improve the effectiveness and the efficiency of our sales efforts. So that's on the overall revenue plan.”

Focus on margin improvement

The second major focus area is on the margin front. Tech Mahindra’s operating margin as of Q3, stands at a single-digit 5.4 percent. To work on that, Tech Mahindra’s delivery teams which were aligned to regions and had many cluttered units, were shifted to create a centralised delivery structure for IT services.

According to Joshi, earlier there was a lack of central ownership, leading to a lack of scalable, innovative and industry-focused solutions. By combining the strong talent pool of the company with significantly improved delivery structure and processes, he believes client service can be further enhanced while also increasing innovation, profitability, and scalability.

Combining entrepreneurial spirit and structure

Joshi is also looking to leverage the company’s entrepreneurial spirit and growth. Entrepreneurial growth has fostered an informal culture. He wants to combine this agility while looking at the frameworks, and ensuring that the changes are implemented and moved quickly.

“The organizational structure over time had become hierarchical and siloed. And I fully believe that a company of this size needs robust processes and frameworks, but there needs to be room for freedom and for creativity as well,” he said.

He added, “We made changes to our internal policies on these lines, and there is a lot more work that is happening in these areas in the market…I think it's important to progress from (just) an entrepreneurial model into an organisation with a unifying vision and supporting frameworks.”

Tech Mahindra hired a bunch of new leaders recently. Joshi recently appointed former CitiusTech chief operating officer Atul Soneja as Tech Mahindra’s COO, former LTI chief marketing officer Peeyush Dubey as CMO, and former Infosys EVP Richard Lobo as chief people officer. All three executives are also former colleagues of his and Infosys veterans.

Earlier this week, Tech Mahindra appointed former Tata Consultancy Services’ (TCS) chief marketing officer Rajashree R as its chief growth officer for America strategic verticals.

Joshi had hired an independent firm to assess the company’s culture. Based on the feedback from them and other leaders in the company, Tech Mahindra has updated its incentive schemes and HR policies too, to reduce bureaucracy and empower the workforce.

He had earlier told Moneycontrol, “The bulk of my direct reports are people who've been in the organisation long term. I am trying to create a mix of tenured talent that really understands Tech Mahindra along with some fresh talent coming in, for areas where we've not had senior representation.”