“Over the next few months, we are focussed on defining the purpose of the company, coming out with a strategic narrative for the company,” Joshi, chief executive officer and managing director of Tech Mahindra, told ET.
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On margins, Tech Mahindra wants to focus on productivity for clients with emphasis on higher margin service lines, turning around loss-making contracts and thinking about pyramids in the future, he added. Despite a 40 bps rise in Q3FY24, Tech Mahindra’s margins stood at a meagre 8.8%.
The plan to revive revenues, Joshi said, will focus on maintaining Tech Mahindra’s leadership position in telecom and manufacturing while positioning itself as a credible challenger in sectors like financial services, healthcare, life sciences and retail.
Mahindra group’s key IT services and consulting firm TechM derives just 16% from the banking financial services sector which has always been the largest spender on technology products and services. Other large Indian IT firms such as TCS and Infosys derive close to one-third of their revenues from this vertical.
The Pune-headquartered IT major is also making efforts to get a bigger piece of the BFSI pie. “The story of growth in financial services is an ongoing story in Tech Mahindra,” Joshi said.
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The percentage of revenue that the company gets from financial services has doubled over the past five to seven years, going from 8% to 16%, he noted, adding that the focus now is on increasing it further.Joshi, who joined Tech Mahindra in December after a 22-year stint with larger rival Infosys where he last served as president, had a six-month transition period at the firm working with recently retired and former Tech Mahindra chief CP Gurnani. Joshi has also made several organisational changes appointing several senior level talent, redesignating several existing leaders, and restructuring the company into different units.
For the third quarter ending December, Tech Mahindra, India’s fifth largest IT services company, registered a revenue of $1.57 billion, a 5.7% decline on-year, while profit after tax fell 61% on-year at $61 million.
Tech Mahindra’s financials underperformed the industry, which over the past more than four quarters, has been facing the brunt of the global macroeconomic slump with subdued growth numbers and reduction in workforce.
On the sector, Joshi said that while the last year was difficult, green shoots in the bigger economy and lifted fears of recession could help the $250-billion industry perform better in 2024. “I don’t think it’s going to be 2021 all over again, where we saw a gigantic boom, but maybe it will be marginally better,” he further said.
On taking over as TechM CEO at a challenging time for the industry, when growth is down to single digits, he said, “It’s harder when things are slow. Because your range of motion is limited. Growth solves a lot of problems. But, people’s willingness to change is much higher when things are tough.”
He said that 2024 should be a better year. Joshi said the company also wants to focus on opportunities to grow in certain segments “where we are smaller than our peer group”.
“We don’t want to be a me-too player. We want to make sure that in areas where we have really differentiated capabilities, we’re able to stand out,” Joshi said.