Davos 2024: Tech Mahindra’s CEO Mohit Joshi is confident of bringing back high margins and growth

Tech Mahindra's CEO Mohit Joshi at WEF, Davos

In his first media interaction since taking over as the CEO and MD of Tech Mahindra, Mohit Joshi said he has a plan in place to turn things around, adding that there is no reason why the IT services major can’t be the best performing organisation in the field.

This comes at a time when Tech Mahindra is gearing up to announce its third-quarter earnings for fiscal 2024 on January 24, after reporting a washout second quarter where the company’s earnings before interest and taxes or EBIT or margin nosedived 210 basis points sequentially and net profit fell 61.6 percent over the previous year to Rs 494 crore.

In former CEO CP Gurnani’s words, Q1 and Q2 were the “most difficult two quarters of his career”.

As Joshi takes over with a lot on his plate, he told Moneycontrol on the sidelines of the World Economic Forum in Davos that Tech Mahindra is working on a plan for revenue, a plan for margins and a plan for the organisation at large.

He recently revamped the company’s organisational structure, which came into effect from January 1.

“We are working on our plan for margins in order to drive greater productivity. How do we make sure that our margin profile is competitive with our peers and then, most importantly, I think we are working on a plan for the organisation. We are building a learning organisation,” he said.

He added, “Tech Mahindra historically has invested very heavily in training and learning. How do we get the benefit of that? We've hired a really impressive chief marketing officer to build our brands.”

Watch the full interview here

Despite the ongoing slowdown in the IT sector, Joshi is bullish on the sector reviving in the medium to long term.

“I've been in this business for over 20 years. It doesn’t make a difference with a plus or minus two (years), when you're looking at a 5, 10, 15-year period. This industry has really come from nowhere to become a world-beating (one), and I strongly feel that the best days are still ahead of it,” he said.

Key focus areas

When asked if he has set a target or a deadline for when the company’s business will recover, he said that he is yet to do that.

“Given the strengths of the company in terms of the talent, client base and groups at work, there is no reason why we should not be the best-performing organisation. But I loathe to set very strict timelines, that would really be a very short-sighted way to get rid of my honeymoon period,” he laughed.

Tech Mahindra gets nearly 40 percent of its revenue from the telecom and communication, media and entertainment vertical, which has taken a hit lately due to clients cutting down on discretionary spending.

In turn, Tech Mahindra has been looking to diversify into other verticals as well. Joshi, a former Infosys veteran who has led the BFSI (banking, financial services and insurance), healthcare, life sciences and software business (including automation and AI) of the IT giant, could prove a good fit at Tech Mahindra in its revival phase.

“If you look at Tech Mahindra, we really have a fantastic telecom and communications business where we are market leaders. We also have a very strong manufacturing business, given the heritage of the group. We have a billion-dollar-plus BFSI business. So it's not a small business. It's a very significant business with deep strengths in asset management, and insurance and banking,” Joshi said.

He added, “We're certainly going to be looking at increasing that, but also, we're looking to increase our healthcare, life sciences business, retail and logistics business. Again, at $6.5 billion in revenues and 150,000 people, we do have the luxury of being good in more than one area.”

On the new organisational structure

Joshi calls his restructuring a mix of old Tech Mahindra hands and industry veterans who have recently joined the company.

“The bulk of my direct reports are people who've been in the organisation long term. I am trying to create a mix of tenured talent that really understands Tech Mahindra along with some fresh talent coming in, for areas where we've not had senior representation,” he said.

Among key hires in the top management, he recently appointed former CitiusTech chief operating officer Atul Soneja as Tech Mahindra’s COO, former LTI chief marketing officer Peeyush Dubey as CMO and former Infosys EVP Richard Lobo as chief people officer. All three executives are also former colleagues of his and Infosys veterans.

Overall, Joshi internally revamped the structure of the company to create a vertical-wise focus for delivery instead of Tech Mahindra’s previous geography-oriented structure. He had created six focused business units: Americas Communication, Americas Technology Media, Americas Diversified, EMEA (Europe, Middle East and Africa), APJ (Asia Pacific and Japan), and India.