The Hindu Business Line : ‘Tech Mahindra’s bet on long-term deals paying off’

Bangalore, Oct. 13 Tech Mahindra Ltd’s focus on large, multi-year deals has begun to pay off, with the company winning over half-a-dozen large deals ranging from $250 million to a $1 billion over the past 18 months.

Majority of these deals were clinched in the past two quarters. Tech Mahindra’s order book stands at a healthy $3 billion, even as uncertainty in the US — the largest IT services market — impacts the Indian IT industry. The company was recently in the news over the rumoured exit of its shareholder and largest client, British Telecom Plc.

In a recent interview Mr Sanjay Kalra, President, Tech Mahindra, spoke to Business Line on the company’s deal winning strategies. Excerpts:

How do you see the recent wins in the current context of an economic slowdown?

It is the best thing we would have done. At least that part (long-term deals) of the business has not been affected by the economic downturn. For the past 18 months, we are playing in the next level doing multi-year transformational deals.

We are now playing a consultant’s role also, trying to identify and solve customer’s problems while helping them cut costs. Long-term deals bring predictable revenues, which is more important than plain growth.

More predictability would mean greater control over costs and predictable margin. Also, we are trying hard to make sure that our revenue is not directly proportional to the number of people we add.

For a company of your size, aren’t these transformation deals big enough?

When the first billion-dollar deal was done, it was big. It’s no longer so as we have a run-rate of billion dollars. When we took the billion-dollar deal, we brought in partners for capabilities that we didn’t have. Where do you stand in terms of developing those capabilities that a partner brings?

It’s a continuous process. A partnership really means that both partners win. Keep your partner updated on the capabilities that you are trying to build on your own. People are willing to partner as long as you are honest and open.

What challenges do you face in executing such large deals?

Challenges stem mostly from maintaining the right attitude, prior experience in handling such deals, availability of skill sets at the right time and right relationships with customers as you are making changes in their organisation. The biggest thing in transformational deals is the ability to leverage internal knowledge. As a result, knowledge management and ability to reuse and leverage knowledge are two critical components that make a huge difference.

Now that there’s a talk of stake sale by BT, will that be a cause for concern?

No comments on the BT stake sale. On the deal wins, BT clearly maintains a role as a shareholder and then as a client. We have won these deals in competitive bids because we demonstrated that we can do it.

Related Stories:
BT deal win provides revenue visibility
Tech Mahindra outlines Rs 638-cr capex plan
Tech Mahindra bags $700-m outsourcing deal from BT