By 2020, 50% of Tech Mahindra’s business will come from IT: CEO CP Gurnani
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Pune: The 57-year-old boss of Tech Mahindra, C.P. Gurnani, says that Indian technology outsourcing companies have always transformed themselves in the past and that it will be wrong to write off the country’s $150-billion outsourcing industry even as new technologies disrupt the landscape. In an interview in Pune last week, Gurnani shared the bets Tech Mahindra is making and why he remains confident that the company will be able to remain relevant even as technology fundamentally changes the way companies across industries do business. Edited excerpts:
Analysts and commentators have started penning obituaries for the Indian IT outsourcing industry. From your perch, what is the future of Indian IT and Tech Mahindra?
It will be wrong to write us off. I see the present as exciting times. Remember, Indian IT has seen changes all throughout its life. It all started with Father Kohli (F.C. Kohli, the first CEO of Tata Consultancy Services Ltd). The model then was that companies said, “we have consultants and we will give them to you”. Then the Y2K moment happened, which was like an inflection point. In all these decades, the industry has grown. So, even now, the focus for Tech Mahindra, and I believe other Indian heritage IT firms, is that you need to make sure we remain relevant. Technology is changing industries around us. My priority No. 1 (is) to make ourselves remain relevant.
So, how are you making Tech Mahindra stay relevant? Can you also share what are, say, the three big bets for Tech Mahindra?
I can tell you not three but five. First is cybersecurity. Second is imaging as a service or say, a service where we use automation platform with radiologist, and run imaging as a service. No. 3 is blockchain. No. 4 is that we want to be the largest system integrator in the Internet of things (IoT). No. 5 is network services, as the world moves towards last-mile connectivity, and focus on software-defined networks (increases).
All IT firms are talking about these newer tech. When can we see Tech Mahindra beginning to disclose the business it generates from each of these five big bets?
We should be able to do this soon. The way we look at it is that we will take 12-16 months to incubate them. So, out of the five, three will go into production phase. It is possible that not all five will go into production phase. And so, I believe that the three which go into production, it is my duty to report the numbers. I have invested shareholder money and I guess it is the right of the shareholders to know what I have done with their money. So, we should be able to report the revenue or business once it goes into production (phase) after 12-16 months.
How different will the Tech Mahindra of 2020 be?
Currently, 65% of my business comes from IT while balance comes from engineering services, network services, customer experience, platform and security. I’m taking a forward call and saying 50% will come from IT and 50% will come from different platforms by 2020. So, obviously there will be changes.
Your thoughts on the internal goal of becoming a $10 billion firm by 2020, and what percentage of revenue will be called digital by then? Will it be more than half of your revenue, as against the 15-7% currently? Will it mean significant revenue from M&A?
I cannot comment on the Internal goals. But on your question of digital revenue, I would say that the way market is moving, getting more than 50% you see is not relevant. Because if I get the topline, I promise you, we will have more than 50% (coming from) digital.
One of the things which is often held against Indian heritage IT firms is that they are too conservative. You are talking about blockchain. But if you are serious, then why not launch a service line? Take a more aggressive approach like the one adopted by IBM, which has set up business focused on blockchain technologies.
I cannot comment on what approach other companies are taking. I’m not betting my company on any one technology. If you look at my company, 65% of business which comes from traditional IT will change to 50% by 2020. So, I will still get 50% from IT. So, I’m not betting my whole ranch on this. blockchain for all you know will be $200 million practice, say, for us when I’m $8 billion or $9 billion.
So, are you saying that there is enough in traditional business?
I am not saying this. All I am saying is that my company’s focus remains and will be in solving business problems. I will choose the technology. I’m not getting married to one technology. And that is the difference between service and product companies.
Tech Mahindra is perceived to be lagging behind in digital technologies. It does not have a strong consultancy arm, for instance.
You are wrong when you say I don’t have a strong consultancy arm. I have about 3,000 consultants. I have probably what is the largest IT telecom services firm out of India— being a leader for the last 10 years and I will be the leader for the next 10 years. From the positioning point of view, I have taken a position: I will be largest IT firm in the media, communication and entertainment industry. We have launched DAVID, and the core reason to launch this is to make ourselves future-ready.