IT services major Tech Mahindra’s average new order bookings rose to $700 million in Q3 from the earlier $400 million, a trend it expects to continue in the coming quarters. The firm is also planning to hire 15,000 freshers next fiscal as it intends to train and put them on right projects early. Further, TechM is also foraying into tier-II cities to garner talent and contain attrition, its chief financial officer (CFO) Milind Kulkarni tells Rajesh Kurup in an interview. Edited excerpts:

Despite a slow period, Q3 was a good one for Tech Mahindra with annual revenue run rate crossing $6 billion. Will this be maintained in the coming quarters?

Due to the furloughs, Q3 is a slow quarter. The communications, media and entertainment (CME) vertical has grown faster than the enterprise vertical, while we had good order booking in the enterprise vertical too. There are supply-side pressures, for which we have various offset actions, while we have also increased our presence in tier-II and tier-III cities. Over the next few months, all the actions will help us mitigate the supply side pressure and continue on the path that we had articulated in the past.

Tech Mahindra’s attrition has increased to 24% during the quarter from 21% in the last quarter…

Attrition has reduced by 300 basis points on the last 12 months basis. This shows the trend, which was increasing over the last few quarters, has reversed this time. Last time it had stagnated a bit. So, all the actions we have been taking are giving us better benefits.

In Q3, Tech Mahindra recorded new deal wins worth $704 million. How is the deal pipeline looking?

The new deals worth $704 million are an increase from our average new order booking of $400 million. The deal pipeline, over the last eight quarters, has almost gone up. Our deal closures are in the range of $700 million to $1 billion. We expect this to continue.

On your hiring plans…

We have hired 10,000 freshers this year and next year we would hire about 15,000. Our intention is to get freshers, train them, put them on the right project early and benefit from that structural change versus just doing lateral hires. We will continue to add people in the business process services segment, IT — as there is continuous demand for transformation projects — artificial intelligence and metaverse among others.

Tech Mahindra is also planning to increase the number of delivery centres both in India and abroad.

We are getting more into tier-II cities such as Coimbatore, Vijayawada, Nagpur, Indore, Bhubaneswar and Chandigarh to get access to talent and help in containing attrition. We will also expand our existing centres such as Pune, Bengaluru and Hyderabad. We are developing virtual centres in Mexico, Costa Rica, Romania and Latvia.

Why did you split your banking, financial services and insurance (BFSI) vertical into two separate revenue streams?

Insurance is a prominent vertical that requires different skillsets. This follows our recent acquisition of European IT solutions provider Com Tec Co. We have another large insurance company as a customer, so we thought of making a separate vertical for insurance.

You are also scouting to acquire companies. What are the capabilities you are looking to bring on board?

So, our M&A strategy is to fill up niche capability gaps, and certain segments or verticals that we want to scale up, which are predominantly manufacturing, digital engineering and BFSI. Our focus would include areas such as Cloud capability, while we will also grow organically.

What are your plans on the 5G front?

On the 5G front, IT firms will be providing support to service providers and for us, it will boost our CME vertical. We would be playing a bigger role to boost demand for services and application in the telecom sector.