TechM invests $100 m to drive innovation

KV KURMANATH Hyderabad | Updated on November 27, 2017 Published on December 16, 2014

CP Gurnani, MD & CEO, Tech Mahindra

Staff encouraged to come up with ideas, work on start-ups, says CEO Gurnani

CP Gurnani, Managing Director and Chief Executive Officer of Tech Mahindra, talks about the importance of IT behemoths to have the agility of a start-up. Walking the talk, he is driving innovation and entrepreneurship within the firm.

The company has invested $100 million in the last few months on an initiative at its sprawling Bahadurpally facility on the outskirts of the city to set up labs.

“It has got three arms. While the i5 Labs focuses on the internal talent by encouraging employees to come up with creative ideas, Solution Scape works on building different solutions for different sectors such as banks, oil and gas,” Gurnani, who was here for an event at the labs on Tuesday, told BusinessLine.

The third component is Co-Create that lets employees, partners and customers to co-build products and solutions. Co-building products with partners and customers would help solve the pressing problems quickly, he said. “We have put in $100 million this year to build the physical infrastructure, platforms and intellectual property at the facility,” he said.

On $5-b revenue target

Gurnani has reiterated that the $5-billion target set by the company is a stretch goal. In the second quarter, it achieved revenues of $900 million, falling short of the required run rate of $1,250 million to reach the target. “I would say the journey is very steep for the next four quarters (for achieving the target). If you add contributions from the acquisitions, it would be about $1100 million, calling for a 5 per cent growth quarter on quarter. We are striving hard to get there,” he said.

Replying to a question on the growing attrition rate when compared to the previous quarters, he said a cycle just around the appraisal time.

On the global market outlook, Gurnani said the US and Europe markets are going strong. Contribution from the rest of the world (non-US, non-Europe) has gone down in the second quarter. Gurnani, however, said this was not a concern.

In the second quarter, the contribution of Americas had gone up to 49 per cent against 44 per cent in the same period previous year.

On utilisation rate

On the lower utilisation rate (which is down at 73 per cent from 75 per cent), he said it did impact the profitability.

“But the investments you make (on the innovation) will yield results in the long run. We are investing for the future, though you cannot show this in your utilisation rates,” he said.

Published on December 16, 2014
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