In an exclusive conversation with CNBC-TV18 during the World Economic Forum in Davos, Managing Director and CEO Mohit Joshi noted that the current approach to reporting AI-related revenue is more of a marketing tactic rather than a genuine measure of value creation.
He explained that Tech Mahindra is developing a clearer framework to assist investors and clients in understanding the impact of AI on deal economics.
Joshi mentioned that the December quarter showcased robust performance for the company, with Tech Mahindra achieving a 1.7% sequential revenue growth, a significant increase in large deal acquisitions, and marking the ninth consecutive quarter of margin expansion.
He reiterated that the turnaround strategy presented to the markets for 2024 is firmly on target, supported by what he described as the industry’s top talent.
Despite facing a challenging global landscape, Joshi stated the company remains committed to its 15% margin objective for the year, clarifying that this refers to an annual average. He emphasized that Tech Mahindra possesses sufficient levers to safeguard margins while focusing on accelerating growth.
The CEO indicated that the company is on track for growth exceeding the peer-average range of 3-5%, citing a rapid recovery from the previous fiscal year to outperform peers in the latest quarter.
He characterized the turnaround as an impressive journey accomplished in a relatively brief timeframe.
‘Europe very important market for TechM’
Geographically, Joshi highlighted that Europe is a crucial market for Tech Mahindra, with its exposure to the automotive sector providing a global presence.
Nonetheless, he mentioned that telecom remains the company’s largest business, driven primarily by domestic and national demand rather than international trade dynamics.
Regarding global uncertainties, Joshi noted it is still premature to predict the effects of tariff wars, asserting that trade disputes are detrimental to all economies. He also remarked that client spending sentiment has improved this year compared to last, creating a more favorable demand environment.
On the topic of artificial intelligence, Joshi countered previous concerns that AI might pose challenges for the IT services sector, labeling it a distinct growth opportunity instead.
He noted that the demand for skilled talent has risen alongside AI adoption, with India emerging as the largest reservoir of trained AI professionals globally.
Using telecom as an example, Joshi highlighted that AI opens significant avenues for transforming networks, customer relations, and the B2B landscape.
He asserted that Tech Mahindra is strategically positioned to capitalize on these opportunities through a combination of creating smaller language models and collaborating with hyperscalers and AI providers to enhance client transformation.
Joshi concluded that the company’s deal win pipeline remains robust, bolstering confidence in sustained growth momentum in the upcoming quarters.
