Tech M to look for momentum in tech: CP Gurnani

CP Gurnani, MD & CEO, and Rohit Anand, CFO, Tech Mahindra, speaking to ET Now after the announcement of Q4 results. IT major Tech Mahindra reported a consolidated net profit of Rs 1,118 crore for the fourth quarter ended March 2023, down 25.8% over a year ago. The profit stood at Rs 1,506 crore in the same quarter last year.

Gurnani says “there is a period of uncertainty, which will last for another two quarters and we, as a company, have decided that we will continue to invest and look at some of the trends or what I call the momentum in technology and build on that. ”

There has been quite a bit of uncertainty that you started the monthly evaluation of demand trends rather than quarterly this time around. That has caused that uncertainty. So, what is the reading from the latest discussions? Is the demand slowdown structural in nature according to you or is it just a few quarters of cautiousness?

CP Gurnani: In a macro environment, there are trends which are not uniform. The trends like in Australia or Japan or in Asia or they become better when you come to the Middle East. There is definitely a sense that they are doing better.

Similarly, when you are in Europe and the US, there are sectors which are doing better than others. My feeling is that this period of uncertainty will last for another two quarters and we, as a company, have decided that we will continue to invest and look at some of the trends or what I call the momentum in technology and build on that.

We are launching a massive upskilling programme which we started two months ago because we believe that there is a lot of unmet demand, particularly in quantum computing, in metaverse, in data sciences and in cloud technologies. Overall, the country continues to be in the investment phase and we will reap benefits in two quarters from now because we would be more ready for the future.

You are far away from your earlier EBITDA guidance of 14%. Realistically speaking, do you see that happening in FY24?

Rohit Anand: Yes, as we have articulated in the past, I am not giving any guidance on any number, but from a perspective of what we have driven in the current quarter on variable cost and on productivity, we will continue to drive that. We made certain investments which are long term in nature, which is why you see some cost increases in SG&A.

That will normalise as we move into the next quarter. But overall from an annual perspective, I think our view on expanding margin as we said in our investor day in the past and even earlier continues and those levers still stands true for us and not just short term. On a long term basis, we articulated our metrics of expanding geographical reach to Americas and Europe more than the rest of the world and we continue to work on that on a long term basis and drive some of those areas of growth.

Since you are talking about investments, we have seen a sharp decline of almost Rs 4,800 crore headcount in Q4, how would you explain that?

CP Gurnani: A lot of our headcount is distributed between IT and BPO. BPO tends to be seasonal because when the retail goes down, you know that some of the BPO’s work also goes down, and it is that monthly agility which is proving that as a company we continue to be agile and we continue to focus on upskilling and reskilling.

Number two, when you are 160,000 people and with the 14.8% attrition, there is a certain loss and at this stage of automation, I have been cautious in making sure that investment is more on upskilling and re-skilling instead of hiring and putting people on the job.

It is just a fine balance. But overall, as a company, we have got this resource management as a dynamic balancing right and I do believe that we have finally applied data sciences into our resource management also.

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