‘I would classify Metaverse as an investment technology right now’
With a well-thought-out succession plan, Tech Mahindra has been hand-holding a new recruit for the past 18 months to step into the big shoes of its chief financial officer Milind Kulkarni, who retires on May 31. Rohit Anand, who will take charge as CFO on June 1, joined the IT major in November 2020 after an 18-year stint with General Electric and backed by experiences of working across geographies. Anand tells Rajesh Kurup that going forward, Tech Mahindra expects tailwinds from 5G, while insurance will be a big focus. The company will continue to build capabilities in Metaverse and be ready to win projects as the technology matures. Edited excerpts.
Tech Mahindra had a succession plan in place much ahead of Milind Kulkarni’s retirement. How did they prepare you for the post?
I had joined about 18 months ago and started handling a particular portion within finance, which was focused more on customer contract, planning and performance management, among others. Later, I started interacting with analysts and investors, and then started working on accounting, tax and other matters of finance. Over the past one-and-a-half years, Milind, CP (Tech Mahindra CEO and MD CP Gurnani), Manoj (Mahindra & Mahindra Group CFO Manoj Bhat) and the broader management team helped me understand the sector and the company. This made it a little smoother than coming in as an outsider.
Going forward, what are the focus areas for Tech Mahindra?
As we go forward, our plans are around telecom, which is 40% of our business, and 5G would give us a strong tailwind. Insurance is a big focus for us, and supporting that growth would be critical within the BFSI (Banking, Financial Services and Insurance) sector. From a business standpoint, high-tech, digital and cloud would be important. From a finance perspective, we need to manage price increases, which will help us from the margin standpoint. We will be also looking at enabling more juniorisation and offshoring, substituting subcontracting with full-time onsite headcounts and integration of the recently acquired companies. Margins, as there is supply-side pressure, will be where our time will be spent.
* With Tech Mahindra focusing more on communications, will this change the present revenue mix?
I don’t think the percentage mix is going to change dramatically as there is significant headroom of market share in the enterprise segment. With some of the capabilities that we built to scale, that gives us advantage to participate in better and bigger RFQs (request for proposals). Both (communications and enterprise) would continue to grow.
* Acquisitions have always been part of Tech Mahindra’s growth. Will this be the strategy going forward?
Last year, of the total 17% growth, broadly 13-14% was organic. This year, our focus would be driving organic growth for the company as the pipeline is strong and we continue to believe that there’s enough opportunity in the market for us. From the M&A perspective, we will be selective and work on the niche capabilities we have. From a quantum perspective, it will be significantly lower than what you saw last year.
What are Tech Mahindra’s plans for emerging technologies such as Metaverse?
The organic growth will come from established technologies, BFSI and hi-tech and 5G. Similarly, from a technology point of view, cloud would be a big driver because more and more people are switching from on-premise infrastructure to cloud. We expect the business process services (BPS) segment to post positive double-digit growth. I would classify Metaverse as an investment technology right now. We will continue to build capabilities in Metaverse, get proof points and pilots done so that as the technology matures, we have an upper hand to win those projects.
* Attrition has been the biggest bane for the IT sector and Tech Mahindra. What are your plans to prevent erosion of talent?
Our attrition stood at 23.5% on an LTM (last twelve months) basis, which has stabilised over the last two quarters, with attrition in Q3 (versus Q2) and Q4 (versus Q3) coming down. We have expanded operations to tier-II and III cities, provided hybrid working models and permitted people to work from their home cities. We are giving opportunities to employees to expand their skills. We have an internal platform where employees can get their skills updated, certified and then being picked up for better projects.
Where do you see Tech Mahindra in the next five years?
From a revenue standpoint, we are a $6-billion company and our aspiration is to keep on growing at a similar pace we saw last year, which was a historic high. The long-term strategy is to make sure we are a highly valuable company from a shareholder and customer perspective, and from being the employer of choice.
