00:00 Everyone, welcome to BQ Prime. Joining us today is the Tech Mahindra Senior Management,
00:04 CEO Mr. C.P. Gunnani, CFO Mr. Rohit Anand, and the CEO Designate Mr. Mohit Joshi. Gentlemen,
00:11 welcome to BQ Prime.
00:12 Thank you, thank you, Tushar. And you want to call us, call you Tushar Deep Singh or
00:18 only Tushar?
00:19 Tushar is okay, sir.
00:21 All right.
00:22 All right. So, Mr. Gunnani, coming to you first. You call this quarter the toughest
00:28 that you have seen in a long while. Take us through your understanding right now and maybe
00:33 the outlook for the rest of the year. We're not talking numbers, but how do you expect
00:38 the year to pan out from here on?
00:40 You know, overall, when I look at some of the known trends, the known trends means events
00:51 that were known to all of us, which is inflation, which is supply chain disruptions, impact
01:00 of the war on the economy, and in a way, some of the geopolitical tensions. What was unknown
01:11 was that despite of good performance of overall economy comparatively, certain transformative
01:25 projects were put on hold. And I would say in a lot of ways, that was unplanned for.
01:33 And that's what you saw that one of my major verticals in CME showed a minus 9.4% decline
01:41 quarter on quarter. So, we knew partially that Conviva has a seasonal quarter, but transformative
01:49 projects being put on hold or one or client going bankrupt was a little bit of an unplanned
01:59 what I would say. So, to some extent, I can only say is that we have learned our lessons.
02:06 We need to be a little better at planning and being able to balance the way we would
02:16 balance our revenue and expenditure. So, when you have a hit on the revenue, you always
02:21 have a sharper hit on your profit. So, I can only say that Tech Mahindra as a company will
02:31 do better scenario planning and will do hence better execution. But in general, I remain
02:39 optimistic about the industry. I remain a bit about Tech Mahindra. And more important
02:46 is I'm confident that the recovery will happen quarter over quarter.
02:55 Just a small question again, would you say that this is the bottom for the industry as
03:00 well as for Tech Mahindra?
03:02 I can't speak for the industry. But for Tech Mahindra, we should be able to recover in
03:11 most aspects quarter on quarter.
03:16 Coming to you, Mr. Anand, wanted to get a picture on how the dealmaking is happening
03:20 right now, both from the TCV value and the client base. Also, from the point of view
03:28 of how what is the nature of the dealmaking that you are seeing, the discretionary spending
03:33 or the long term deal?
03:34 So, as you can see from the numbers, I think the deal value that we announced, the TCV
03:44 has gone down quarter over quarter. And the trend over the last three quarters have been
03:50 declining there. And we narrated that earlier also that our first half was going to be a
03:56 tough scenario. And that's what is coming out to be in terms of the discussions. Mainly,
04:03 I think in the communication side, the telcos are bringing a lot of control on their fixed
04:11 spend and restricting new capital outlays or discussions that's causing a reduction
04:18 in deal flow there or also in the decision making. In terms of other segments, I think
04:26 generally the nature of deals that we were seeing a couple of years back, but more on
04:31 the transformation side, that has changed from a mixed perspective more in terms of
04:39 vendor consolidation. We're seeing more deals in terms of cost and efficiency side
04:43 versus transformation. So that's been the deal exchange. And overall across segments,
04:51 more so in telecom than others, the decision making is delayed, but that is prevalent across.
04:56 That's what we're seeing. But the view is as we move forward, the change will move
05:04 towards a favorable side. And this is probably the first half is the bottoming side from
05:10 that perspective.
05:11 What about the conversion from your deal? So the deal pipeline, I assume is robust.
05:18 But do you see the conversion coming in from conversion of from deals to revenue coming
05:22 in in the later half of the fiscal?
05:26 I think that that's important on what is the 2Q and the 3Q deal events. I think if that
05:34 goes back from a momentum standpoint and gets to a bold range perspective, then that converting
05:43 into revenue would be possible in the second half. But if that moves into the fourth quarter,
05:51 then very limited revenue conversion happens for the deal executed in the fourth quarter.
05:56 So I think you have to continue to monitor the situation closely and see how it plays
06:01 out in the next few months.
06:03 My next question is to Mr. Mohit Joshi. Just wanted to know, the exposure to the CME vertical
06:09 is quite large. About 42% of the revenue comes from the CME vertical and that's declined.
06:14 You are a BFSI veteran for the longest time. How much diversification do you think will
06:20 be needed so that we are tech-minded back to growth phase again?
06:25 Sure. So look, I think this is quite a nuanced answer to this question. The first is that
06:32 I think it's been a stated strategy for a while, stated by CP and the other management
06:38 team, that we do want to build outside of CME, that is to build up a practice in insurance
06:46 and banking, financial services, and retail and manufacturing. So it's a stated strategy
06:50 of the company. It's not something new that I've come up with. But the second thing is
06:57 that I also want to be very mindful of the fact that we have genuine strength in CME
07:01 and that the elements of our CME expertise, for instance, the strength on the network
07:05 side, that can be replicated in other markets as well. So while we are looking to build
07:11 out capability and strength in other sectors, I want to be absolutely mindful of the fact
07:17 that we do not let go of the immense strengths, the immense expertise, the market presence,
07:24 the client relationship that we have in CME, because they're irreplaceable. So we really
07:28 have to do both to defend and to build on our strength in CME while building strength
07:34 in other sectors as well. And this will be aided by the fact that the group actually,
07:38 the M&M group has significant strengths in some verticals, like in manufacturing, for
07:43 instance, but also in travel, leisure and hospitality, also in financial services. So
07:50 we'll be looking to build on the expertise and the relationships in those sectors to
07:56 build out a deeper presence for Tech Mahindra in manufacturing, in travel and hospitality,
08:02 in financial services and others.
08:04 Got it, Mr. Joshi. My next question is to Mr. Gurnani. We have seen a decline in profitability
08:11 as well. Revenue conversion is still a hazy picture. What margin levers can the company
08:18 deploy to actually shore up your profitability going ahead in the next few quarters?
08:25 Really, it's an ultimately, to me, profitability is just a sign of various initiatives that
08:36 are being undertaken in the company. And so the various initiatives that we are looking
08:43 at is number one, much stronger technology focus. As new technologies, quantum computing
08:54 or AI technologies become mainstream, we want to be able to make sure that our talent and
09:02 technology are ready for serving the clients. So that is the first part. Second part is
09:12 that we strongly believe that our relationship with our customers and the depth of our service
09:20 offerings, if we are able to reinforce our client partner programs and are able to engage
09:28 better with our clients, we should be able to increase our velocity in revenue.
09:39 The third area is what I call execute, execute, execute, which means we know areas where we
09:47 have to improve. During the press conference, our CFO Rohit shared with you that there are
09:55 initiatives regarding subcontractors, regarding utilization, regarding simplifying some of
10:06 the geographies or portfolios or portfolio divestments. So Rohit has already outlined
10:14 the program for all of us. It is just execute, execute, execute.
10:19 All right, Mr. Anand, the final question to you. We're looking at the headcount that has
10:27 declined by around 4000. That is also eased. How are the utilization levels right now and
10:33 what are your hiring plans for the rest of the year, considering how the business picture
10:38 changes?
10:39 So if you look at the 4000 reduction in headcount, half of that is driven by BPS, which is typically
10:48 the seasonality that we see in the quarters. As we go into the second half, you will typically
10:53 see a ramp up that will happen in the BPS. So maybe look at it that differently. From
10:59 a utilization perspective, let's look at IT, where there's a 2000 people reduction in headcount
11:05 that has happened QOQ. I think that when you look at the revenue drop and with that, the
11:15 alignment from a headcount perspective is still high. And as we move forward, that alignment
11:21 will get better. When you look at hiring plans for the second half, I think it's more, it's
11:28 less about hiring. It's more about pyramid correction that we're going to be focused
11:34 on where we'll drive correction and generalization and make sure we get the productivity benefit
11:42 there. And retraining our existing staff, as CP mentioned, more and more on generative
11:49 AI and areas where we can help utilize their skills on various customer initiatives, as
11:56 well as driving internal productivity measures. I think that's the focus we'll drive as we
12:01 move into the rest of the year.
12:03 One final question to Mr. Gunani and Mr. Joshi. Mr. Gunani, I think you have about six months
12:09 or five months to go. Mr. Joshi, if I may say so, you have pretty large shoes to fill.
12:16 So how are you taking the rest of the next five months? And beyond that, Mr. Joshi, how
12:20 do you see your tenure at Tech Mahindra?
12:24 I think, look, the benefit of this very thought through transition, the board and CP have
12:31 given a lot of thought to this transition. It's really being managed in a very organized
12:36 and a very professional manner. This gives me the benefit of getting a deep insight into
12:42 the customers, into the teams, into the solutions, and working with CP on the whole forward organization
12:48 structure and the operating plan. So it is very thought through and very useful from
12:56 my perspective. I will be using the next five months to again get a complete download from
13:04 CP on the organization and on his plans to take it forward, which obviously I and our
13:11 management team will define. This is a time to listen and to learn. And obviously, five
13:17 months are not enough to download a lifetime of great fans' knowledge, but I will do my
13:24 best.
13:25 Mr. Joshi, what is your take?
13:26 I think, clearly, I'm very happy now that I've spent almost all my waking hours in the
13:35 last five weeks with Moir. That A, clearly a head over shoulders, very sharp mind, but
13:49 more compassionate mind for the employees. So clearly, what I know Moir will bring into
13:59 the company is, as I said, sensitivities to the people, sensitivity to the customer, and
14:08 being a good mind really means that it will help us in agility and in leadership. Secondly,
14:16 his knowledge and experience of building multi-billion dollar verticals, I think is the need of the
14:23 hour for Tech Mahindra and his leadership to build multi-billion dollar verticals will
14:29 only help us accelerate faster. And thirdly, more important is the culture. It's not about
14:41 the strategy, it is more about the culture. And whatever I've seen the last five weeks,
14:50 and it's not only him, he has spent time with my family, I spent time with his family, and
14:56 I can only say is that Moir brings in values and the culture, and he would be a custodian
15:05 of that culture. And maybe he will only make it better, because his ethos are pretty similar
15:14 to the Mahindra rise tenets, and overall the culture at Tech Mahindra, which is customer
15:21 and people centric. So very, very happy, very proud of Moir.
15:27 Thank you so much, gentlemen, for joining us today. It has been a tough quarter, but
15:32 all the best for the rest of the year. Thank you. Thank you. Thank you. Thank you, gentlemen.
15:37 Thank you.
15:45 [END]
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