Mumbai: Tech Mahindra Ltd, part of the $16.7 billion Mahindra Group, is strengthening its mid-management leadership by appointing seven more young executives to help it meet its ambitious $5 billion revenue target by 2015, managing director C.P. Gurnani said in an interview on Wednesday.
With this move, Tech Mahindra has a total of 14 young executives—all of whom have titles of chief executive officers (CEOs) but handle different responsibilities within the organization, with some even reporting to unit heads. On 17 April 2013, the company said it had plans to develop 30 such young CEOs by 2015.
“We need more youth because ultimately it’s a fast changing technology, along with complexities and high rate of cross currents. We chose seven in the first round, part of the young CEO programme, and are in the process of choosing another seven,” said Gurnani, who takes personal interest in mentoring them.
These young leaders don’t necessarily need to head a business segment, he explained. “They could own a new acquisition, or a new initiative. This is not about talent management for me. It is about mentoring, coaching and executive development, which is required not only to meet our $5 billion target, but also for the next few years, and this is also because the nature of the business is fast changing,” he added.
In April, for instance, Tech Mahindra appointed two segment leaders—Rahul Bhuman and Raghav Kumeria.
The group’s entry into engineering education, Mahindra École Centrale (MEC), is driven by Bhuman, who focuses on strategic initiatives in the areas of education and finance.
Kumeria, overseeing a new business initiative, helped launch a platform to provide remote technical support services for telecom companies and Internet service providers.
“This has been a positive and worked really well for us” said Gurnani, adding the young leaders will also focus on things like the company’s social media platform called socio and a “trouble to repair platform”.
Ankita Somani, information technology (IT) sector analyst at Angel Broking, said this is a typical leadership grooming programme and it makes sense to have a good mix of young and experienced talent, especially with new technologies such as SMAC (social, mobility, analytics and cloud) becoming growth areas for technology services providers.
On whether Tech Mahindra will manage to reach $5 billion in revenue by 2015, Gurnani admitted the target may be “stretched”, and while the company was on the “right trajectory in terms of organic growth, but with just nine quarters away, a portion (of the targeted rise) will have to come from inorganic growth”.
“The reality is the company has been contradicting itself,” he added, “as we keep saying we need that one big acquisition, but the merger and acquisition (M&A) team is one we never set any targets for, and we do not want to have the M&A team deal with a bad transaction.”
Some analysts predict Tech Mahindra will look to expand its banking, financial services and insurance (BFSI) portfolio as it lags other large IT companies in that segment, with just 10% of its revenue coming from it.
“BFSI would be likely choice as it (Tech Mahindra) just has 10% exposure there. However, I feel the company will also consider healthcare and retail,” said an analyst at a local brokerage, who did not want to be named.
Tech Mahindra currently has 600 clients, but “the average revenue per client is low if we take away our top 10 clients”, Gurnani said. “Our organic policy is to defend and grow the business, as we have already invested in that relationship.”
On the business from British Telecom (BT), Tech Mahindra’s key client, Gurnani said, “It has seen degrowth for the last few quarters, and we expect it to degrow in the next few quarters also.” He declined to give a specific number citing client confidentiality.
Gurnani said the IT budgets of clients for 2014 are almost similar to that in 2013. However, “when you look at the budgets, a lot of businesses are also spending on IT, such as customer care companies would spend a lot on social media and R&D (research and development) guys are spending on IT and innovation. We are being able to tap into newer pockets,” he said, adding that Tech Mahindra is focusing more on retaining contracts.
He declined to comment on media reports that a part of International Business Machines Corp.’s (IBM) IT outsourcing contract with Bharti Airtel Ltd could go to Tech Mahindra.
“The renewal market is not my biggest market and we are not playing big time in the infra renewal market. We will clearly do only two-three large deals,” he said.
In December, Mint reported that Bharti Airtel was re-negotiating its 10-year outsourcing contract with IBM and was set to hand out more business to other technology services vendors led by Tech Mahindra.