As India’s fifth largest IT firm Tech Mahindra Ltd battles slowing growth in an industry under pressure due to the advent of new digital technologies such as automation and the Internet of Things (IoT), Jagdish Mitra, its chief strategy and marketing officer, has the unenviable task of charting a strategy that helps the company expand in traditional businesses and derive growth from the emerging digital space. In an interview, he speaks about the new growth areas and the company’s strategy of investing in start-ups to drive innovation. Edited excerpts:
Tech Mahindra has entered a lot of collaborations with other companies for developing new technologies. What is the strategy behind that?
Whether it’s technology, process or customer behaviour, each one of them will have significant change in terms of the way the process operates. Therefore, it’s important that companies leverage collaboration to its maximum to deliver the system. That’s where Tech Mahindra’s philosophy of collaboration plays very significantly. We think that one of the biggest learnings that companies like us need to have is that not everything can be built by us. What we are trying to build is more of an orchestration of players in the service rather than trying to create a business which is all dependent only by creativity of our company.
The government has announced the third round of bidding for its BPO promotion scheme. Do you think it has resolved the concerns of the industry?
I think from the IT BPO industry perspective, it’s an industry issue right now. Until and unless those issues get resolved, I am not sure if the third round of bidding is going to significantly help. We will have to wait and watch a bit. From our perspective, I don’t think there’s a lot happening in this.
Will acquisitions continue to be part of Tech Mahindra’s growth strategy?
We continue to drive acquisition, core competency and organic development in the firm. If you look at growth, a lot of our capabilities, including some of the new technologies like IoT and analytics, have all been built through core competency within the company; we started from scratch. In certain areas, we felt it was very important to bring outside capability. It will always be a balance between both, as you can’t always build a business on either one or two. But we think inorganic, or mergers and acquisition, will be a key point of our growth acquisition.
Tech Mahindra has been aggressively investing in startups. Will that continue?
From our perspective, the strategy will continue, we will drive it even further this year. We have two parts to this. One is driving, creating and giving an opportunity for our own teams to create businesses that makes sense for Tech Mahindra and they tend to be more on the B2B side, though we have experimented on C2C also but only because it helps us understand the costumer perspective. We also look towards leveraging our presence in one of the most innovative centers of the world. For example in the Silicon Valley, Israel, London and India, we are incubating and will continue to incubate startups as they align with us.
Are you looking at any specific areas when it comes to investing in start-ups?
From a tech perspective, our next level of lookout will be in areas like analytics, IoT, security and machine learning—four key areas that cut across all horizontals. The rest of it is very vertical-led, like fintech start-ups. Augmented reality is another area where we already are participating, in partnership now, but not investing in start-ups. But we will see how that matures and then we will decide.
What are doing to tap the fast growing connected-car segment?
Connected cars is a very important part of our strategy for multiples reasons. One is because of our parentage. It’s the future for what you are seeing as autonomous cars or next level of connected cars. We see that as a key future for our parent company, Mahindra & Mahindra, and they are investing significantly in that space and so are our other customers.
Has there been an increase in spending from telecom companies and will it boost Tech Mahindra’s growth?
Overall for the industry, yes it’s on the upswing. We expect to see much more positivity out of the telecom industry coming in. We are seeing that happening in the conversation we are having with the customers and the deals that are coming through. So, a lot of our deals were on hold and therefore that conservation is starting to open up in terms of what transformation they are trying to bring in.
The IT industry has been under pressure with some big players cutting their forecasts. Will the industry be able to meet the NASSCOM’s target of 10-12% growth in 2016?
From industry pressure perspective, yes there is pressure, because of things such as automation and digitization movement. But the industry is not shrinking, it’s growing. So from that perspective, people who can take advantage from growth in the new areas will be able to meet that growth. Those who will not be able to take advantage in the short term will obviously see that happen in the long term. My view is that the growth factor that NASSCOM has put together is across the board for the industry and should be achievable.