After three straight quarters of decline, Tech Mahindra posted a sequential growth of 1.8% in the December quarter of FY24, a quarter during which new managing director & CEO Mohit Joshi was at the helm for just 13 days. But the ground work that Joshi laid down over months as the CEO-designate, analysts say, has started showing results in small ways.
Joshi is currently in the process of defining his long-term strategy and the company is now focused on three tracks — revenue, margin improvement and organisation building.
Analysts at Emkay Global said in a note: “The first track is focused on sales improvement by simplifying the organisational structure to six SBUs (strategic business units) from 12 earlier. This will bring more attention on and investment into top accounts, while revamping efforts towards engaging with smaller accounts.”
In a recent earnings call, Joshi said: “We have also eliminated the dotted lines and delayered the hierarchy for better synergy and accountability. The portfolio companies will also be integrated under respective business units for better realisation of synergies.”
The second track pivots around margin improvement by creating a centralised delivery structure. The EBIT (earnings before interest and taxes) margin of the company, which was at 4.7% in the September quarter, marginally went up to 5.4% in the just concluded quarter, but was still one of the lowest in the industry. Earlier, at TechM, delivery teams were aligned to the regions and spread across many units, and there was no central ownership.
Commenting about Joshi taking a cue from his former organisation, Pareekh Jain, founder at Pareekh Consulting, said: “Earlier, under Ravi Kumar, Infosys had a centralised delivery structure. And at Tech Mahindra, some of the delivery units related to the telecom vertical were under former CME head Manish Vyas. Now that the telecom vertical has been sliced into three units, delivery teams have now been centralised in India and that will be managed by Atul Soneja, the COO.”
“Joshi is making the sales unit more accountable and enabling more coordination between delivery units. A centralised delivery unit helps in managing big and large accounts. From the same units, various work, whether it is related to BPO or cloud and data or something else, can be managed efficiently. Centralised delivery just can’t get you large deals. But it helps the company manage large deals efficiently and thus prepares the company for bagging large deals,” he added.