Tech Mahindra started the transformation 6 quarters ago and will continue to evolve: CFO | Jobs Vox


“Transformation projects have flourished around the world and we have benefited from it. When we connect the macro commentary with the micro, which is our data in terms of pipelines, projects and conversations we have with our customers around the world, we don’t see any impact from the macro narrative right now. Our pipeline is still strong and new projects are still being won,” he says Rohit AnandCFO,

Let’s talk about N Chandra’s comment saying it’s a bleak forecast for next year. He says there are supply chain shocks such as fuel and semiconductor issues, a challenging macro environment and the year is likely to see low growth and high inflation. Are you upset and worried about the state of affairs?

There are different aspects of macro and micro gaming. Inflation is high in all markets, commodity prices are rising and from a production perspective, it has affected different sectors differently depending on the price elasticity of the segment. From an IT perspective, we’ve been seeing pressures on the supply side for almost 12 to 18 months now. That continues to reflect demand as post-Covid demand has expanded from an IT perspective.

Transformation projects have been booming all over the world and we have benefited from it. So after connecting the macro commentary with the micro in terms of our process, projects and the conversations we have with our clients around the world, we don’t see any impact from the macro narrative right now. Our pipeline remains strong and new projects are still being won. Last quarter we announced $1 billion in gains and going forward, while the peak may be over from a demand perspective, we’ve seen 18 months, but from an industry standpoint, we still think growth will be favorable because I’m looking forward to it. It doesn’t reflect the gloom or doom we see on the macro side.

After the fourth quarter, you indicated contract wins in FY23 could be around $4 billion. Is there any change in that?

We don’t usually give guidance, but what we indicated last year and we kind of elaborated on that again by saying that what we typically see is that because some of these closings are cyclical in nature, the way deals are done, $700 million for billion is the range we see trending quarterly. Based on the plan and timeline for closing deals, we will continue with what was similar to last year in terms of completed deals. We don’t see a change there.

Visibility is usually for us cycles of 12 to 18 months. It looks robust right now, but given what you’ve heard, what we’ve read, we continue to have those dialogues with our customers and regularly look at our pipeline data to see if anything changes.

What are the prospects when it comes to the trend you expect as the Street is a bit concerned that the US will go into recession and that will derail IT spending. Is that worry a little over the top?

It is part of regular customer interaction cycles. We haven’t seen too much customer concern at the moment. There are two ways to look at it; obviously there could be short-term budget freezes and spending where people might want to save given the uncertainty around that, but at the same time, from an IT perspective, it’s also an opportunity to help further expand a lot of their processes which helps cost cycle management and to effectively focus on key areas of their business.

I think that’s an opportunity and it could provide some short-term knee-jerk reaction in certain organizations that are more affected by their margins, but we haven’t seen that. Some start-up companies, Bay Area companies, have a little more reactive change compared to others who maintain the status quo and are currently working on multiple projects.

For four quarters in a row, given the USD growth has been over 4%, is that a reasonable expectation for FY23?

What we said last time about our earnings is that for next year, when we look at our business, 40% of our business is in telecom and that the telecom cycle is favorable with the 5G wave. So 5G is a tailwind, with 40% of the business and some enterprise verticals, that’s where we see our growth potential and pipeline. Closing the deal is favorable. Overall from a business perspective, we are looking at double digit growth for this year. That’s all we’ve articulated because we avoid giving specific guidelines.

Going forward, what are the attrition rates or trends so far for Q1?

I can indicate how things are moving. If we look at the last two quarters and tie them together, we’ve seen that the number of declines at the end of the quarter has improved. So the cycle that was moving up from a depletion percentage point of view started to go down and then down. But as I mentioned, the supply market is still tough.

There is a demand for digital and niche skills, data analytics, cyber security and all these are in high demand. However, we continue to see a tight cycle in the market. Spending will hover around an elevated level for the next few quarters before perhaps starting to bottom out in the second half of next year as we look forward.

As we look ahead, what gives you sleepless nights, what is your big, key concern going forward?

Right now, the headlines. The macro environment is setting up a lot of people, with some of the top CEOs of multinational banks and investment banks making gloomy headlines. That’s obviously a sign of concern, but we’re sticking to the basics. We try to stick to the basics, where are our 1,000 customers, where are they spending, what are we doing to help them better improve their margins and operating profile. We’re continuing that dialogue with them on a regular basis by staying close to them, because that’s what’s important, that’s what will ultimately be reflected in the numbers as we move forward.

Internally, we started a transformation in the company about six quarters ago in various aspects, including delivery and process transformation. We will continue to develop on it because we have been working on it anyway. In the current environment, we would not stop there. From our perspective, we try to focus on our customers and continue to extract value for them.


Source link

Implement tags. Simulate a mobile device using Chrome Dev Tools Device Mode. Scroll page to activate.