For information technology services major Tech Mahindra, the second quarter of this fiscal has been the best in a decade. This was driven by deal wins and growth across key verticals, managing director and chief executive officer CP Gurnani tells Rajesh Kurup in an interview. Gurnani said the company was banking on digital, and would be at the forefront to help clients transform legacy systems. Edited excerpts:
Tech Mahindra’s Q2 net profit rose 26% to Rs 1,339 crore, making it the best quarter in the last 10 years. Where did this growth come from?
The quarter has been a challenging but exciting one. We reported deal wins of about $750 million and we expect a trajectory of similar deal wins in the future. We saw a significant acceleration in growth-led by 5G, with all key growth verticals, including BFSI, healthcare and lifesciences and hi-tech continue to grow at a good pace. We have seen an overall increase in technology spending.
Will you be able to maintain this growth trajectory?
Our strategic investments in 5G and digital modernisation have shown good results, helping us shape our growth story this quarter. Further, deals are ramping up and we will see the growth coming through those as well. From a large deal contribution perspective, we continued to witness the growth momentum and we believe the communications, media and entertainment (CME) segment to be a significant contributor in all of this.
Attrition for Tech Mahindra rose to about 21.2% during the quarter from 17.2% in the first quarter? What are your plans to retain talent?
We had in the recent past anticipated talent shortage and had planned for hiring or reskilling or upskilling a little ahead of time, thereby investing heavily in building new skills. In addition, we have also been ramping up our presence in Tier-II towns to hedge attrition. We believe that Tier-II and III cities are emerging as future talent hubs and have the potential to drive the next phase of growth.
Tech Mahindra is banking on digital, especially through strategic +partnerships, to grow?
This year, we strengthened our alliances and partnerships with hyperscalers such as AWS, Google and Microsoft to launch new services on workload migration and low latency 5G use-cases through co-creation. Now, we are uniquely positioned as a strategic partner with Tier-I infrastructure vendors and hyperscalers to leverage their stacks and provide joint engagement, scalable platforms and services to careers and enterprises.
On the hiring plans and pay hikes for the current financial year?
In the quarter of September, we added 14,930 employees split equally between BPS and IT; IT has grown to about 7,000 people. The additions have ramped up through the quarter. We intend to double our fresher intake hiring in FY22. We continue to focus on skill-based hiring, especially in emerging technologies.
We are looking at hiring across digital technologies including Artificial Intelligence, Cloud, Robotic Process Automation, Blockchain, 5G, Internet of Things and Cyber Security, among others.
We are looking for fresh talent in nine Tier-II cities including Bhubaneshwar, Nagpur, Chandigarh, Thiruvananthapuram and Kolkata.
Tech Mahindra acquired two firms, US-based Infostar for $105m and London-based We Make Websites for £9.4million ($13million), in October. Would acquisitions be your strategy going forward?
These acquisitions are in line with our strategy to strengthen digital capabilities and provide enhanced and comprehensive transformation services to our customers globally. These acquisitions will help us in building high growth capabilities. Going forward, we expect a lot more focus on deals related to digital transformation and helping service providers and others in their 5G journeys both at a network level and process and systems. We will continue to help our clients transform their legacy systems, which would remain a strong focus area.