Low margins, low utilization in Q3 were part of a deliberate strategy for better future quarters: Tech Mahindras Gurnani

“We’re investing in new talent and expanding our presence in Tier II cities to prevent attrition.”

“We’re investing in new talent and expanding our presence in Tier II cities to prevent attrition.”

Tech Mahindra, a provider of services and solutions for digital transformation, consulting and business reengineering, will hire 10,000 freshmen this year. The idea is to significantly increase hiring over the next year, the company’s managing director and CEO said. CP Gurnani in an interview. exclusive talk with Peppystores. Edited excerpts:

What is Tech Mahindra’s hiring outlook for the current quarter (Q4) and beyond?

We have a robust talent management engine that recruits in the market and also looks at internal fulfillment in a big way. This year we’re going to be adding about 10,000 freshmen to the bottom of the pyramid, and the idea is to really increase that significantly over the next year.

Attrition remains a tough nut to crack for all tech players. What would be a comfortable attrition rate for Tech Mahindra?

To address this issue, we planned retraining and upskilling a bit in advance, investing heavily in building new skills. In addition to reskilling the workforce, hiring more employees and training them in future skills, we are also investing in new talent and increasing our presence in Tier II cities to ensure attrition. At Tech Mahindra, we saw a 3.3% decline in the turnover rate in Q3. So overall we are confident in addressing the supply side challenges.

The share of customer wallets is increasing, transaction sizes are getting bigger and pipelines are getting stronger. Do these lead to a secular trend?

With increasing digital transformation in all industries, even traditional sectors and companies are ready to invest more in digitalization. Hence, the tech industry has seen big deals from all industries lately. Sectors such as communications, healthcare, BFSI and corporates are experiencing strong deal momentum. For example; in Q3 FY22, Tech Mahindra reported $704 million in transaction profits, broken down across the CME (communications, media and entertainment) and corporate verticals. This is the fourth straight quarter of such deal wins for us. This obliges us to deliver more, with a strong focus on disruptive technologies such as Metaverse, Web3.0, 5G, Blockchain, Quantum Computing and others.

The pandemic has created an increasingly connected world. What are the newer challenges and opportunities for technology providers?

First of all, we know that several industries, particularly those with discretionary spending, have been hit hard. The overwhelming impact on the global health system and the subsequent lockdowns and restrictions on activities caused enormous disruption around the world. The IT industry has also faced some challenges as remote working and customer security concerns have caused some delays and lost opportunities. However, given the increasing demand for software, social media platforms, smart solutions and new technologies in the new normal, the industry has performed well.

Tech Mahindra has opened the 2022 calendar with an acquisition. Tell us more about your M&A strategy?

The acquisitions align with our strategy to strengthen digital capabilities and enable comprehensive transformation services for our clients globally. Our acquisition of Com Tec Co IT Ltd. (CTC) this January will allow us to expand our offering to include high-end digital engineering services for some of the largest insurance, reinsurance and financial services clients in the world. (CTC is an IT service provider focused on BFSI sectors with development centers in Latvia and Belarus). This acquisition will give us a new focus on global growth. We see a lot of potential in the insurance sector.

What has been the response to your UaaS (Upskilling-as-a-Service) platform, especially given a huge shortage of digital talent in the market?

At Tech Mahindra, we train our employees in next-generation technologies to make them future-ready. We are also strengthening our learning ecosystem and programs through new collaborations to fill in the blanks and provide our employees with a seamless New Age learning experience. The UaaS platform was created to accelerate the development of new skills for over 60,000 employees worldwide to become a “fit for the future” workforce. The rise of new technologies requires professionals to upskill and adapt to be productive, efficient and relevant in the dynamic workplace. With this, companies must also ensure the future viability of the workforce by upskilling and reskilling, as well as attracting a more diverse and inclusive workforce with a flexible work structure.

They recently reported a drop in margins. How do you intend to improve your margins and reduce costs in the coming quarters?

Our margins in the third quarter were impacted by supply-side challenges and lower utilization, which were part of a deliberate strategy we followed to increase staffing levels, particularly at the bottom of the pyramid, so we can reduce our operating expenses in the future quarters . Headwinds were partially offset by operational leverage and some tailwinds in SG&A (selling, general and administrative expenses).

What exactly did you do to restructure your employee pyramid by changing the mix?

We have a strong focus on upskilling and expanding our talent pool while becoming more diverse and inclusive. To that end, we’ve already increased our settings in Tier 2 and Tier 3 cities like Trivandrum, Vizag, Nagpur, Bhubaneswar, Chandigarh, Kolkata, Indore, Vijayawada, and Coimbatore, among others. In recent quarters, we have hired nearly more than 8,000 people at these centers. In addition, we now have access to talent from various nearshore centers such as Mexico, Canada, Latvia, Romania, Costa Rica and Belarus, among others. Our strategy of investing in internal talent training and hiring from Tier 2 cities will clearly make a difference.

Can we expect a dramatic change in the market environment in the global technology industry after the end of the pandemic?

The pandemic has caused massive disruption and transformed the way we work, consume and communicate. In the last two years, we have witnessed accelerated digitization across industries that has pushed every company to transform into a technology-based organization. The disruptions in the digital and IT world will drive advances in new-age technologies such as quantum computing, cloud computing, the Internet of Things, artificial intelligence and machine learning.

Leave a Reply

Your email address will not be published. Required fields are marked *