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Business News/ Companies / People/  Do we want to be Infosys and Wipro? Perhaps not: Vineet Nayyar
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Do we want to be Infosys and Wipro? Perhaps not: Vineet Nayyar

Tech Mahindra's Vineet Nayyar speaks about the newer areas that the company is trying to explore

Vineet Nayyar says under the young CEO programme, Tech Mahindra picks up young people who show elements of versatility, capabilities as a manager and other qualities, gives them responsibilities and lets them be answerable for the results.Premium
Vineet Nayyar says under the young CEO programme, Tech Mahindra picks up young people who show elements of versatility, capabilities as a manager and other qualities, gives them responsibilities and lets them be answerable for the results.

New Delhi: India’s fifth largest software services firm Tech Mahindra Ltd is set to increase its footprint in the telecom sector, which accounts for almost half of its revenue, in the belief that the scope of telecom has increased manifold over the years. The company is betting on newer telecom technologies including software defined networks (SDN) and machine-to-machine (M2M) communication, besides mobile technologies and analytics, to penetrate deeper into the telecom sector as it chases its $5 billion revenue target by 2017. In an interview late last month, Vineet Nayyar, executive vice-chairman of Tech Mahindra, spoke about these newer areas that the company is trying to explore and the strategy it is deploying therein. Edited excerpts:

You have seen this company grow from inception. What has made things work?

We inherited a tiny vertical telecom. At that time, the issue was whether we were to diversify or keep on focusing on telecom sector, but we took a contrarian view. We were late to the game in 2005. We said why not focus on telecom alone. And we have been quite successful. Today, we are a $1.5 billion in telecom itself and expanding into contiguous areas. We started with OSS (operations support systems), BSS (business support systems), which are traditional areas, but then we got into operations and network management.

People say we are overexposed in telecom. I would say we are underexposed. The field is growing exponentially. And we believe we only have a bit of it. Telecom is moving from enterprises to households to individuals. There is nothing that is not connected. So with the changing universe and consumption habits, spending habits...whether it is medicines, automobiles, industries, schools, households...no area is untouched by telecom. The nature of telecom has been changing. With machine-to-machine and data analytics, it has become very exciting.

Our growth is pretty robust in telecom at a much larger base. We also recognize that there are global players like Accenture doing better than us, but not in India, where we are the leaders. They want to eat our lunch. Similarly, we want to get into their space—the space which Ericsson and Alacatel-Lucent are in. That’s the multi-billion dollar space. With SDN (an architecture that is more suited to newer technologies such as SMAC and M2M), the nature of the network operations is going to change. We want to get into network operations now and then work towards SDN. The scope is huge. Can we take up this challenge? That is the issue.

What kind of conversations do you have with Anand Mahindra?

(Anand) Mahindra believes in completely empowering his managers. The trust and faith he has is unbelievable. Our conversations are basically on philosophical issues or issues of trends, but specifics, he only looks at during meetings. He lets people make mistakes.

After acquiring Satyam, you transformed the entire company. In the last five years, how has been the progress of new verticals and how satisfied are you with the growth?

Growth has been pretty robust. When we took over (Satyam in April 2009), we didn’t quite know how much was the revenue at that time. Raju had claimed they were doing $2 billion, but it was around $1.5 billion. Because of the exodus consequent to his confession, it had come down to $800 million. So we are now about $1.6 billion or so, so we have massaged it into a fairly decent level, but again our strategy is going to be the same as it was in telecom. Do we want to be Infosys and Wipro? Perhaps not. They are great companies, but we much rather pick only few verticals and do what we have done with telecom. That is what we are looking at.

What areas you are looking at?

Engineering is clearly one. I believe, there is a huge scope for it. We have all the capabilities and talent required. Whether we like it or not, we have to be in BFSI (banking, financial services and insurance), because that is the largest. We lost almost every account because Raju’s confession was strategic, he did it just after Lehman. So the last thing that any bank or insurance company wanted was to have on its roll a company which was as scandalized as we were. That segment was completely diluted, but we are coming back now. We are also looking at healthcare, but that’s the gleam in the eye at this point of time.

How important is BT for you at present?

In BT (BT Group Plc.), we still have the largest share of the wallet. In fact, that has been growing. Their expenditure has come down because they have nationalized and we helped them do that. The last thing we want is to over-invest in any particular area. So yes, we have come down by 10-15% in the last few years, but we still have about 60% wallet share. I think BT is still very important business for us.

What about SMAC (social, mobility, analytics and cloud)? Being a fairly new company, does that make you more equipped to use these emerging technologies?

We see potential in SMAC, but the question is how much it would be able to generate that kind of revenue. As a manager of a large public firm, I have to take that into account. Yes, we have to create a base, and yes, SMAC can grow two times or three times, but it is small. We have to look for bread and butter elsewhere. We have not at all underestimated these capabilities. It contributes around 5% of our revenues.

Are you also looking at moving towards automation and artificial intelligence?

Looking forward, will we be as labour-intensive? The answer is no. Things are moving so fast, with M2M coming in, things will move towards more of automation. You will see change happening. These guys are doing more work because of the automation. Though it is not going to happen soon, my worry is when will this decline start.

What is the strategy behind the appointment of young CEOs? You have also been incubating and acquiring a lot of new companies.

In many ways, technology is not like a fact sheet. Five kids sitting in this room on the floor, and that’s what you see in California, can do amazing things. When you do traditional business, we have all kinds of questions. Analysts insist on quarter-on-quarter growth. In many ways, if I look at the long-term perspective, it makes companies take short-term measures. So you have to pull yourself away from it and say I don’t particularly care if I am beaten this quarter as long as I have got my long-term strategy right. There is a huge pressure which comes in. So to insulate people from that pressure, we said, here is this money, you hire a warehouse or an attic and you work out of there—let’s see if something comes out of it. If it works out, that’s great, if it doesn’t, life is like that.

On the young CEO programme, I think what we need is global business leaders. And, unfortunately, it is not given a very high priority in the country. So pick up a young man or woman of age 25-26 who show elements of versatility, capabilities as a manager, initiator, hard work, leadership qualities. And these qualities you can see even at the age of 7 or 8. So we are trying to pick up those people, give them responsibilities and let them be answerable for results. So we pick up from technical side, from business schools, who have worked for some time and showed some potential. We don’t succeed every time, but we make a good effort. If they work out, they will be vice-presidents.

How successful has the programme been?

It’s been two years. We are giving them responsibilities and are watching them carefully. I gave one young CEO the responsibility of setting up an engineering college. We have been very successful in that. The first class was in August-September. With a year-and-a-half, we have an outstanding faculty. And he reports directly to me. We work with many of them. Will all of them be successful? No. Sometimes ambition and hard work are more important than sheer intellectual capability.

You have been vocal about unemployability. How is your company tackling that issue?

Again, you should not get carried away by that. The skills have two levels. One is the mechanical part of it, the other is the individual who is driving it. Is he an entrepreneur? Is he willing to break an icon? Is is willing to move away from beliefs that he has nurtured over a long time? So, those are the issues, and I believe we have some very young bright people. You can spot them out as the young leaders. Regrettably, the reason we set up an engineering school was because we feel that we have not been producing global business leaders.

We were producing mechanical kids who got trained from Kota or other such centres and cleared their IIT (Indian Institute of Technology) exams. Perhaps only (one) part of their brains was used. You ignore the other part of the brain that leads to creativity. We also require breadth. Our engineers lack breadth. That is why, in this college, French or Spanish is mandatory. You have to take an exam for that. There is a huge emphasis on humanities as well. How can you call yourself educated if you have not studied philosophy?

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Published: 03 Oct 2014, 11:18 PM IST
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