Earnings Edge | Tech Mahindra Management Decodes Q3 Numbers | NDTV Profit - video Dailymotion

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Earnings Edge | #TechMahindra's revenue grows after two quarters, profit misses estimates. Management decodes the results. #Q3WithNDTVProfit    -------------------------------------------------------------------------- For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia Visit NDTV Profit for more news:https://www.ndtvprofit.com/ Don't enter the stock market unaware. Read all Research Reports here: https://www.ndtvprofit.com/research-reports Follow NDTV Profit here Twitter: https://twitter.com/NDTVProfitIndia , https://twitter.com/NDTVProfit LinkedIn: https://www.linkedin.com/company/ndtvprofit Instagram: https://www.instagram.com/ndtvprofit/

Transcript

00:00 caliber of our talent. We have embarked on a turnaround phase in TechEmp's evolution

00:05 and we are actively making foundational moves to upgrade our performance. The overarching

00:12 goal that we have in this phase is to make the investments and the changes to maximize

00:17 our long-term earnings growth, to drive a culture of performance in both delivery and

00:22 in sales. As we've shared previously, we're in the process of defining our long-term strategy,

00:29 which will then be effectively implemented to give the long-term value for our customers,

00:34 for our employees, and for our shareholders. In the previous earnings call, I shared the

00:39 fact that we are embarking on three tracks to unlock the value from our operations. The

00:46 first track is for sales improvement, the revenue growth track. The erstwhile organization

00:53 structure at TechEmp comprised of 12 sales SBUs, which we have now simplified to just

00:59 six units. We have also eliminated the dotted lines. We have delayed the hierarchy for better

01:05 synergy and for accountability. The portfolio companies are also being integrated under

01:10 the respective business units for better realization of the synergies. We also scanned through

01:16 our portfolio and we saw a need to reconsider how we allocate time and investments across

01:22 our overall client portfolio. What we found was that there was a low investment focus

01:27 on our top accounts, and I think this has resulted in our not realizing the true value

01:33 of these very significant clients that we have. At the same time, we have found ways

01:38 to substantially improve and to better utilize our efforts in engaging across the smaller

01:43 clients as well. So, in a nutshell, we are bringing more attention and investment to

01:48 the top accounts, and we are revamping our efforts to engage with the smaller accounts.

01:55 These actions are going to improve the effectiveness and the efficiency of our sales efforts. So

02:00 that's on the overall revenue plan. The second track that we'd shared is for margin

02:04 improvement. Historically in TechEmp, as the delivery teams were aligned to the regions

02:10 and they were spread across too many units, there was a lack of central ownership leading

02:15 to a lack of scalable, innovative, and industry-focused solutions. We have now moved to a centralized

02:22 delivery structure for IT services, which helps us foster innovation and domain expertise,

02:28 but also helps us implement focused programs directed towards cost reduction and margin

02:34 expansion. In my seven months over here, I found that at TechEmp, the quality of the

02:39 delivery talent is very strong, and our staff really have an intense desire to serve clients.

02:45 By combining this strong talent pool that we have, which significantly improved delivery

02:50 structure and processes, I believe that TechEmp will further enhance its client service while

02:56 also increasing our innovation, profitability, and scalability.

03:01 In addition to the plan for revenue and a plan for margins, we are also working on a

03:06 plan for reorganization. TechEmp historically has thrived under entrepreneurial growth,

03:13 and this has fostered an informal culture. The intention now is to, you know, is to combine

03:18 this agility, but also to take a look at, you know, the frameworks and to make sure

03:25 that we're able to implement changes and to move quickly. The organization structure

03:30 over time had become hierarchical and siloed, and I truly believe that a company of this

03:35 size needs robust processes and frameworks, so there is room for freedom and for creativity

03:42 within the set framework. We've made changes to our internal policies on these lines, and

03:49 there is a lot more work that is happening in these areas in the months to come.

03:54 For an organization which is as big and as diverse as TechEmp, I think it's important

03:58 to progress from an entrepreneurial model into an organization with a unifying vision

04:03 and supporting frameworks. We have also just recently concluded a cultural assessment using

04:09 an independent assessment firm, and the final report has identified an encouraging set of

04:14 cultural strengths, and these strengths, as you can imagine, are around customer centricity,

04:18 they're around a sense of belongingness and a pride in the company's heritage, in the

04:23 group's heritage that we have seen. But the study has also highlighted some areas where

04:28 our organizational practices need to improve, and in that regard, the key improvement opportunities

04:34 really include elevating the roles of our delivery organization, which I believe that

04:39 the centralization will help put that into place. It has also identified the need for

04:45 improving the consistency of our associate rewards and the consistency of our feedback

04:51 processes. So based on these inputs, and these inputs

04:55 were a set of surveys, detailed focus group sessions, the collective feedback of our leaders,

05:01 we are working towards establishing and really building on the culture of the company, building

05:06 a further culture of performance, a culture of professionalism, learning and merit. We

05:11 have already started making changes to our incentive schemes and to our HR policies to

05:16 reduce the bureaucracy and to impart the workforce. And I believe that by diligently embarking

05:21 on these three priority areas, right, the plan for revenue, the plan for margins, and

05:26 the plan for the organization. I'm very confident that we have, you know,

05:30 we have all the strengths that it needs to pull off this plan. As I have repeatedly said,

05:36 the strengths of the company lie in our talent pool, in our client base, and the very strong

05:41 heritage of the company and the very strong heritage of the group. We are a market leader

05:46 in CME and in manufacturing, and I believe we have strong emerging strengths in banking

05:52 and financial services, healthcare, life sciences, and retail. We have a fast-growing BPS business,

05:58 and we have distinctive capabilities in IP, in engineering, and in AI. So I believe that

06:05 we have the foundation, the merit, the talent, the values, the ability to achieve all our

06:09 goals, and I don't see any hurdles that stop us from becoming really the best technology

06:15 services company in the space. So building on these strengths, along with

06:20 the focused efforts on the areas of improvement that I mentioned, we're embarking on our turnaround

06:25 effort that will take TechM to the next stage. The primary objective of this turnaround effort

06:31 is to maximize TechM's long-term revenue growth and long-term margin. Doing so will require

06:37 substantial changes. It will require some turnaround costs and above-normal investments

06:42 over the next year. And to underscore this, especially given the multi-year opportunities

06:47 we see, we will use this turnaround period as an opportunity to invest to significantly

06:52 improve our positioning in a set of target markets.

06:56 We've also worked to onboard a significant set of leaders, and the previous quarter was

07:01 in a sense a quarter of new beginnings. Richard Lobo, as you know, has joined us as our new

07:08 chief human resources officer. Rajshree has joined us as the chief growth officer for

07:14 the Americas strategic verticals. Piyush Dubey has joined us as the chief marketing officer.

07:21 I had already previously announced the joining of Atul Suneja, our chief operating officer,

07:26 Roshan Shetty, and Pankaj Kulkarni as our BFSI heads in the U.S. and Europe, respectively.

07:33 In addition, we have also strengthened the leadership to scale the BFSI vertical in Asia

07:38 Pacific and the ANZ region. And I want to take this opportunity again to

07:42 welcome them to Tech Mahindra. They are significant additions to the team, and I'm sure that they

07:49 will bring great value to their rich experience and domain expertise. I believe that we already

07:55 have a great team in place at the helm, and with these new additions to the Tech Am family,

07:59 we should be able to take this organization to the new heights from already very strong

08:04 foundations. So now moving on to the Q3 results, we report

08:09 revenue today of $1.573 billion for the quarter ended December 2023, which is a growth of

08:19 1.1 percent, you know, for the quarter sequentially, and a decline of 5.7 percent on a year-on-year

08:25 basis. As we look further into the segments, the growth in the quarter was mainly driven

08:31 by our strengths in the manufacturing sector, where we continue to leverage our history

08:36 and our deep expertise in the automobile and related ER and D services. We are also seeing

08:45 an uptick in the retail segment during the holiday season, and that played out this year

08:51 as well. Outside this, most of the other segments, like

08:54 CME, like BFSI and high-tech, were impacted by furloughs. We have reported EBIT margins

09:02 for the quarter at 5.4 percent, which is an expansion of 65 basis points. These numbers

09:09 are the outcomes of actions that we have taken to de-risk the portfolio. Once you adjust

09:15 for these exceptional items, the operating margin stands at about 7 percent. We report

09:20 new large deal wins, TCV, at $381 million for the quarter. This comprises of deal wins

09:27 across our key segments. And just to give you a few examples, we were

09:33 selected as the strategic IT transformation partner by a prominent life and annuities

09:38 provider in North America. This is a large, multi-pillar, comprehensive transformation

09:43 engagement that includes the modernization of the core through cloud migration, application

09:48 services and infrastructure services. TechM was also selected as a strategic partner by

09:54 a U.S.-based telecom OEM for building and operating the next-gen state-of-the-art lab

10:00 in Plano in Texas. We were chosen as a partner of choice by an American package and supply

10:05 chain company. The portfolio transformation deal includes a scope of work across application

10:11 development and maintenance, enterprise applications, cloud, next-gen data analytics, AI machine

10:18 learning, as well as digital design. TechM has also been selected as a prime service

10:24 partner by a U.S.-based telecom operator. TechM will provide transformative design,

10:31 development, management and support services for the ILAC stack. We have been selected

10:36 by a large Asian bank for a comprehensive digital banking CX deployment servicing their

10:43 customers in the region. So you see a range of wins across geographies and across vertical

10:49 areas. Just to spend a little bit of time now on

10:52 the progress that we're making from an AI perspective, and we have seen significant

10:57 progress on the Gen AI front. We launched the Vision Amplifier, which is a solution

11:02 that infuses Gen AI in computer vision. It provides an end-to-end workbench to substantiate

11:10 computer vision use cases. Earlier, we had launched the Email Amplifier and our Ops Amplifier,

11:16 so this is our third offering in the Amplifier suite. We currently have active client conversations

11:21 related to Gen AI, and we see early-stage experiments and POCs now starting to move

11:27 into production pilots. Many of these engagements are in the areas of conversational AI, document

11:32 AI. Gen AI, as you know, is an integral feature of large transformational deals as well, and

11:39 we have also seen standalone Gen AI deals. These are in areas as diverse as enterprise

11:44 knowledge search, customer engagement, business process management.

11:50 In terms of industry segments, healthcare and life sciences, you know, stands out to

11:55 me as an early adopter of Gen AI. I think we are seeing specific interest in areas like

12:00 drug discovery, EMR, and medical audio scripts. We're also helping hyperscalers and SAS providers

12:08 to scale their AI offerings. We see the emergence of complex use cases of Gen AI applications

12:15 in areas like chip design. And to maintain a lead in this space, we will continue to

12:20 train our associates with Gen AI-led skills, and we intend to enable this for 100% of our

12:27 talent base. Currently, we have trained over 16,000 associates, and the coverage will increase

12:34 as we move forward. This is for pair programming. A much larger number of people have broader

12:39 Gen AI and AI training. Finally, from an awards and recognition perspective,

12:45 I'm happy to announce that Tech Mahindra is the only Indian company to make it to the

12:50 Dow Jones Sustainability Index, the World Index 2023, part of the DGSI World Index for

12:57 the ninth consecutive year. We've also been recognized as among the progressive places

13:02 to work in 2023 by ET Edge. Now, having given you the broad general overview,

13:09 I want to hand it over to Rohit to share an update on the financials. Over to you, Rohit.

13:13 [END]

13:16 Rohit Gupta, CEO, Tech Mahindra, India, India Bank, India Bank, India Bank, India Bank,

13:23 India Bank, India Bank, India Bank, India Bank, India Bank, India Bank, India Bank,

13:31 India Bank, India Bank, India Bank, India Bank, India Bank, India Bank, India Bank,

13:38 Thanks Mohit. I will just share the financial results in detail for the quarter. So we ended

13:56 the third quarter with 1.573 billion US dollars, which was up versus last quarter by 1.1 percent.

14:04 When you break it down into coms and enterprise, communication vertical declined by 0.3 percent.

14:12 Enterprise grew by 2 percent on constant currency basis. When you kind of look at this growth,

14:18 we had certain one-time revenue in the quarter because of which we got some upside. If you

14:22 normalize for that, we are flat versus last quarter. We did have some positive impacts

14:28 due to seasonality in retail business and our Commviva business, which was offset by

14:32 the negative impact we have at the year-end due to furloughs. In terms of large deal wins,

14:38 our TCV wins was at $381 million. From a margin and profitability perspective, we ended up

14:46 at $84 million US dollar at EBIT level, which was up from $73 million last quarter. The

14:53 margin percent hence was 5.4 percent, which was an expansion of 65 basis point QOQ. As

15:00 we mentioned last quarter, we continue our journey on looking at the portfolio, rationalizing

15:05 certain businesses where we don't want to be long term. Based on those actions, if you

15:09 normalize for that impact, our EBIT margins of the quarter is at 7 percent, similar to

15:15 the normalized margin last quarter. Moving below EBIT, our other income for the quarter

15:22 was $11 million US dollar, which was down versus $32 million last quarter. Forex losses

15:28 was $5 million versus breakeven, we either had a loss or a gain last quarter. In terms

15:35 of ETR, we were at 22.8 percent this quarter. We made the PAT at $61 million US dollar,

15:43 which made the profit margin at 3.9 percent. In terms of free cash flow, we had a great

15:47 quarter. We declared $228 million of free cash flow, which was two consecutive quarters

15:54 of more than $200 million of free cash flow. When you look at the DSO improvements, we

15:59 saw six days of improvement in the quarter, which got our DSO down to 91 days. We do expect

16:05 the cash flow conversion to normalize in the next quarter, but for the year we will still

16:10 be looking at a very healthy cash returns. In terms of the hedge book, we ended the year

16:15 December 31st at a 2.3 billion hedge book versus 2.5 the previous quarter. As you know,

16:22 we follow the hedge accounting policy based on that. At a mark-to-market gain was around

16:27 $5 million US dollar. 2.8 of that is taken to the P&L, the rest goes to the Reserve.

16:33 We stand at cash and cash equivalent of $843 million as of 31st December, which is healthy

16:40 from our balance sheet perspective. And as mentioned earlier, we have taken a series

16:45 of action this year from Q2 and Q3 from our portfolio, both on the top line and bottom

16:51 line. And result of these actions resulted in lower reported earnings, but we are pretty

16:58 confident that as these actions give us long term benefit, you will see the return of that

17:06 in the future quarters and years to come.

17:08 So, we now open to take questions.

17:11 Thank you Mohit and Rohit. We will now conclude this stream. For those who have questions,

17:21 please do not hesitate to ask them.

17:22 Thank you everyone for joining us. We will now open the conference for a Q&A session

17:28 for media friends who have joined us virtually and are present here. Those who have joined

17:32 us virtually can please post their questions in the chat box. We will start with the media

17:37 here. If you can please say your name and the publication.

17:40 Hi, I am Rachana from CNBC TV18. I would like to ask about reported EBIT margins. We are

17:45 at 5.4%. What is the outlook for Q4? Apart from that, how much of the reorganisation

17:50 is complete and how many more quarters of margin pain do you see will continue?

17:56 At a normalised level, the 5.4 is the reported number. As I mentioned, the normalised margin

18:00 is at 7%. So, as you look forward for the current quarter, I think most of our actions

18:07 are closed. We are still looking at certain portfolio companies and as a part of the annual

18:13 process we will keep on looking at impairment and the requirements on how they are going

18:20 to give future results for us. So, that is a part of the annual process. But outside

18:26 of that, most of our actions are done. As you look forward, our Q4 should be a normalised

18:33 margin of 7% and above. But as a guidance, we usually do not give that. But that is the

18:38 baseline that you should look at.

18:40 Additionally, if you could shed light on why have deal wins come down to $381 million

18:46 from 640?

18:47 There has been a slowdown, especially in the sectors where we are strong. In telecom, we

18:58 saw continued weakness throughout the previous calendar year. And these things are also a

19:03 little bit lumpy. By its very nature, large deals can sometimes move from one quarter

19:08 to the other. That is all there is. So, a general slowdown, especially in the sectors

19:14 where we are strong and the delays that we are seeing overall. I also think that we are

19:20 being more prudent and selective in the deals that we do, given our focus. That would be

19:26 an additional factor.

19:27 Speaking of sectors, there has been muted growth in communication, BFSI and high-tech.

19:33 When do you see recovery in these sectors?

19:37 That is not even a million-dollar question. That is a $64 billion question. I think if

19:42 anybody could forecast when the recovery would happen, it would take more than a mere tech

19:49 services CEO to predict that.

19:51 Look, I think it is very hard to tell when the markets will pivot. Certainly, it seems

19:56 that the consensus seems to be that the second half of the calendar year is when people will

20:03 start to see an improvement. I do not think the recovery will be simultaneous across geographies

20:10 and across sectors. Maybe for BFSI and for healthcare, we will start seeing green shoots

20:16 in six to nine months. For some other industries, it could take longer.

20:20 This is the last question for Outlook on attrition.

20:28 Look, I think we have had a very good track record on attrition and compared to our peer

20:34 groups, we have performed better for the past year or so. Attrition has remained low. There

20:38 is a slight tick-up that we are seeing, especially in deep technical skills. I think it is a

20:44 sign of as the market improves, we will see attrition coming back a little bit.

20:48 Aishwarya, before you start, the next question I will take online. This is from Ayushi Kaur.

20:54 Can you add a bit more color on the standalone Gen AI deal secured by Tech Mahindra in terms

20:58 of size and the kind of deal?

21:00 Yes, so look, like we said, a lot of these are proof of concepts and experimentations

21:08 that we are now seeing move to production stage. Just to give you a sense, we have been

21:14 working with a number of telecom companies to deploy Gen AI chatbots for digital deflection.

21:21 We are also using Gen AI to reduce the power consumption in networks. We have used it for

21:27 retailers as they look to reshape their catalogs. We have worked with auction houses as they

21:32 look to reimagine their art. We are looking to bake it into many of our large deals. For

21:38 instance, a lot of our large deals have developer productivity and overall productivity using

21:45 AI, and we are baking it into our service lines. We are working with ISVs to incorporate

21:53 it in their offerings. So it is now very comprehensive. It is very comprehensive and baked into our

21:59 large deals, baked into our service lines, as well as standalone deals. So that's the

22:05 additional flavor we can provide.

22:07 Hi, sir. This is Aishwarya from ETNOW. You mentioned about the turnaround effort and

22:14 some sort of investment, big investments coming in. Could you shed a little bit of light on

22:18 how much, what the figures are, and the timelines?

22:22 Sure. So look, I think, like we said, we are in a turnaround phase of the company, and

22:27 we are working on the plan for revenues, which is going to be the focus on the sectors, the

22:34 service lines, the geographies. There are multiple levers that we're looking at from

22:38 a margin perspective. And there is an investment we have to make within the organization, right,

22:43 whether it's in terms of learning and training or in terms of marketing and brand building.

22:49 We have not quantified the exact amount. And like we had shared previously, April is when

22:54 we come back to you and expect to present you with a snapshot of what the early cut

23:00 of the plan is looking like, and then maybe share details with you as we go through the

23:05 year.

23:06 Is there a range you can talk?

23:08 It has been exactly 33 days since I've been the CEO, so hopefully not too late. It's not

23:14 been so long that our plan is overdue.

23:18 In terms of growth, you've been lagging behind as compared to other peers in this particular

23:22 sector. Do you think it has finally hit the bottom, or should we see an uptake from here?

23:29 No, look, I think, you know, our growth has been challenged. I think part of it has to

23:34 do with the sectoral distribution of our revenues, in the sense that we have the highest exposure

23:39 to telecoms, which has been a segment that has seen challenging growth, not just for

23:44 us, for everybody. But as the sector comes back, as we focus on service lines, as we

23:50 focus on our strengths and capabilities in other sectors, I do believe that we will come

23:54 back. And that is what the Toronto plan is focused on. It is focused on making sure that

24:00 our margins and our growth achieve parity with the peer group. So that is the intention.

24:07 In terms of furloughs, will that extend into Q4 as well? And are there any early signs?

24:14 So there is, you know, in furloughs, especially in geographies like Australia, and especially

24:18 in sectors like high tech, there is, you know, for the first two weeks of January as well,

24:23 you do have a furlough impact. So we do expect some sort of an impact in the current quarter

24:27 as well.

24:28 Final question. You said you just completed about 33 days. So going forward, for the year

24:37 of 2024, how is it going to be different from 2023?

24:40 Look, I think, like I said, you know, we are building on the foundations of a very strong

24:45 company. We have a great talent pool, we have a great client base, and we have a very significant

24:52 amount of support from the group, which has very unique capabilities. We are looking to

24:56 streamline the organization, which is why we have done the RE-ORG. We are looking to

24:59 invest back in the organization in terms of brand building, in terms of training and learning,

25:04 in terms of our infrastructure. We are looking to sort of invest in our service line. So

25:10 this is how we're looking to, you know, to build the organization through the investment

25:16 and growth, through the focus on margins and through the organization. And the outcome,

25:20 you know, will be in terms of revenue growth and margins.

25:25 The next question is from Veena Majhi. Are you going to colleges for hiring this year?

25:29 If yes, how many will you be hiring?

25:31 Yes, we will be going to colleges for, you know, for fresher hiring. The exact numbers

25:39 we have not shared yet. We will be sharing those in April.

25:43 Haripriya? Sorry, Tushar.

25:45 Hi, gentlemen. This is Tushar from ATU Profit. In the statement that you put out, you talked

25:50 about a dichotomy in the quote that you put out. So you have growth in manufacturing and

25:55 healthcare, but there is pain or weakness in communications, BFSI and high tech. So

26:00 do you see this dichotomy widening in the year ahead? Or do you see a retraining of

26:07 focus on BFSI now that you are here because of your background? Secondly, on expansion

26:14 of that, how are your conversations with clients now that they may have set their budgets?

26:19 What is the sense you are getting from them for the demand environment? Mr. Anand, for

26:25 you, just one question. What is the strategy on the margin recovery? I think you have spelled

26:29 out as part of the three tracks that you said. But in the near term, how do you want to go

26:34 back to those top tier margins that you had about maybe three or four quarters ago? Thank

26:40 you so much.

26:41 Sure. So I think, look, on the sectoral distribution, the thing that I will mention is we are still

26:52 seeing volatility in telecom. We are not seeing spend come back in a very significant way.

26:57 But I do believe that the worst is behind us in terms of just the very strong drops

27:03 that we saw in 2023. This doesn't mean that we will not see near term volatility in this

27:08 quarter or the next quarter, but it does seem that the magnitude of the challenge that we

27:12 saw in 2023 will not again recur in 2024. As far as BFSI is concerned, I do feel that

27:19 we are underrepresented in that sector, even though, compared to our peer groups, even

27:24 though we do have a billion-dollar-plus practice. So we will continue to – what we are doing

27:29 just now is we are looking at the various assets that we have from a BFSI perspective,

27:34 where we've got, for instance, our transaction processing capability in Target. We've got

27:39 very high-end consulting capabilities with CitiSoft. We've got digital engineering capabilities

27:44 with Citico. And we obviously have a broad set of relationships across the globe with

27:49 banks and insurers. So we're taking this together with a new team that we have, building a comprehensive

27:54 storyline, and I'm confident that over time this will have an impact and we will be able

27:57 to build a larger business from a BFSI perspective. To your question in terms of client conversations,

28:08 you know, I think that while compared to maybe six months ago or nine months ago, there is

28:14 more optimism in the client base, it's too early to say that there is sort of a turning

28:18 point or a tipping point where things are looking more optimistic.

28:21 So we should get –

28:23 No, I think it's too early to say that we are seeing green shoots. In any case, like

28:27 I mentioned, even when we do see green shoots, right, look, it is not going to be like the

28:31 COVID era, right, where you saw a global sort of push into technology across sectors, across

28:37 geographies, across client demographics. Everything was booming, right? Even if there is a turnaround,

28:43 the expectation is that it will be limited to a sector or limited to a geography. So

28:47 there isn't going to be a everything boom like we saw two years ago.

28:53 Yes, so the margin standpoint, as I mentioned, our normalized margin is going to be 7% EBIT

29:00 right now. I think from there next year, we will definitely see an uptick. And as Mohit

29:06 said, we will also carve out certain investments that we want to do for long term basis because

29:11 you got to look at, you know, from a turnaround perspective, it's a few things, right? You

29:16 make certain portfolio choices that we stick on for the next three, four years. You also

29:20 make some long term investment that we stick on for the next few years. And some of the

29:23 long term investments are needed right now to give you the benefit, right? So we're taking

29:27 a little bit of a longer term view versus just this quarter, next quarter, what do we

29:31 need to drive it? So I think it's a long term shareholder value creation. In that context,

29:37 the idea is what's the best thing for us to do to once we lay the foundation organization,

29:42 which Mohit already announced the team is in place, as we go level deeper, culture,

29:49 all the other stuff that we're going to be doing, agility on the processes, we try to

29:52 do all that. With that, how do we sustainably get improved margin and a better growth position

30:00 versus just looking at short term profile. So we will improve definitely next year. But

30:04 the quantum of that will be in balance to keeping long term view in mind.

30:08 Good evening, gentlemen. I'm Hari Priya from Reuters. I looked at the geographical breakdown

30:14 and I see that as the world has sort of declined about 11.3% year on year. And sequentially

30:19 there's been a growth. But I wanted to understand, is that something you're looking at derisking

30:23 from? Are you looking primarily on focusing on Americas and Europe? What is the strategy

30:28 there? Is there any particular geography you're seeing pain in? And if you can sort of elaborate

30:32 on the demand in America and Europe as well. Also, you mentioned substantial costs and

30:36 investment, right? Is there like a timeline on how many quarters you expect to see this

30:41 before, you know, expect to invest before you start seeing any return on it? Thank you.

30:49 So from a rest of the world perspective, some of the actions we've taken are directed towards

30:54 that because some of the portfolio was not long term aligned with where we want to be.

31:00 So we have taken that decision that's reflective in the growth, de-growth that you see. From

31:05 a long term vision perspective, our focus is going to be from a concentration perspective,

31:09 increase our mix more in US and Europe. That's the intent over the next three to four years.

31:15 And that's where our investments will also be guided towards. So that's kind of where

31:20 we are moving from a direction perspective in terms of demand and other drivers.

31:24 Yeah. And the only thing I'll add to that is, look, you know, it is not like we are

31:27 defocusing from the Asia Pacific business. I just want to clarify that. Because within

31:32 the Asia Pacific region, we have a very strong franchise in Australia, right? We have a very

31:36 strong franchise in Japan. We've got an absolute jewel of a business in Singapore. And we've

31:42 got a wonderful business in Indonesia, right? So we are looking at selectively, you know,

31:46 growing in these markets where we have opportunities. So I just want to make sure that it is, we

31:53 are taking a very strategic approach towards, you know, the markets where we invest and

31:58 where we put in our dollars. And these are all very important markets for us. Markets

32:02 where we are marginal, for instance, right? Where we don't have very significant capability.

32:09 Like Papua New Guinea, for instance, right? We will not be looking to invest in those

32:12 markets. And as far as the, sorry, what was the other question?

32:17 The demand. I wanted to get demand color on America and Europe and on the investment in

32:21 terms of a quarter timeline. Yeah. As far as demand is concerned, look, I

32:25 feel that, you know, manufacturing, again, we have seen through the cycle has been, you

32:31 know, quite steady in the Americas. Healthcare, there are certain actions that we have to

32:39 take in Q4, which will, you know, have an impact. By the way, healthcare has been, you

32:43 know, reasonably robust for us in the first nine months of the quarter.

32:50 Yeah, I don't think there is any, you know, specific, you know, BFSI Europe versus BFSI

33:00 US color to it, quite honestly. It is very, very client specific.

33:05 Sorry, investment in terms of the number of quarters you are expecting.

33:10 Oh, yes, it is too early to share that assessment about, like I said, we are building out those

33:16 plans and the plans will have their own investment profile. But what we wanted to clarify to

33:21 you as Rohit mentioned that, you know, we are looking at this as a long-term business.

33:25 We are not looking at making any quick fixes. We are looking at investing for the long term

33:30 because this is a, you know, we feel that this is a wonderful franchise and over time

33:35 we should be able to develop, to deliver really steady returns to customers.

33:40 But we do really want to build, you know, to build steadily rather than get quick hits.

33:48 Debangana?

33:49 Hello, gentlemen. This is Debangana from Money Control. Just to add on to Haripriya's point,

33:57 want to get a sense of, you know, US elections are coming up in 2024. So, is that kind of

34:02 factoring in into your customer conversations? The second thing I wanted to get a sense of

34:08 is your hiring plans. So, last quarter there was an addition, you had added net new addition

34:14 was there quarterly and this quarter the headcount has again gone down. So, wanted to get a sense

34:19 of the hiring plans. Also, just a sense of how do you plan to end FY24 in terms of fresher

34:24 hiring and in terms of discretionary spending. So, since 2024 has already started, do you

34:31 expect any recovery? Probably in which pockets are you going to see the recovery happening

34:37 first?

34:38 So, I think as far as the numbers, the overall numbers are concerned, I believe that the

34:42 reduction is largely from a BPS perspective that we have seen this quarter, which reflects

34:48 the seasonality of the business linked to the holiday season. Otherwise, it is linked

34:53 to the overall revenue, you know, sort of the revenue that we have for the quarter.

34:59 As far as the, you know, the hiring is concerned, we will be hiring, like I mentioned, fresh

35:05 graduates, you know, through the year. That is a significant portion of, you know, of

35:09 our plan to, you know, to bring in fresh talent and to invest in training for new capabilities.

35:16 We do not have a, you know, detailed sort of hiring plan for FY25 that we are sharing

35:22 at this time.

35:23 Ramita, you have a question?

35:24 Sure, and on the discussion…

35:25 If I may take this offline, I am being cognizant of time, we will take it after the call.

35:32 Just a couple of questions around the restruct… in the leadership changes. You mentioned Roshan

35:37 and Pankaj are leading some different markets for BFSI. What is Vivek Agarwal's role going

35:43 to be here?

35:44 Vivek is looking at strategy for the group that is his role and he continues on his existing

35:51 responsibilities of looking at M&A and a couple of other corporate responsibilities.

35:56 And you had mentioned last quarter about the breakup of leadership between J-PAC and EMEA

36:01 and US. You have obviously announced Rajshri and Harsh Vendra's roles. Who is heading

36:06 EMEA for now?

36:07 EMEA is Vikram Nair.

36:08 Okay. Shivani?

36:09 Yeah, hi.

36:10 I must commend you on being so well informed.

36:11 Yeah.

36:12 Hi, Shivani from Business Standard. Mohit, a couple of questions on the restructuring.

36:23 Communications, as you have said, is, you know, kind of slow. From a strategy point,

36:29 where do you see telecom/communications? 35% as of this quarter, that's the share

36:36 in it. Do you see that, you know, coming down? Is that a strategy that you are looking at?

36:41 Yeah. So, look, I think the communications vertical is really the, you know, the lifeblood

36:45 of the company, right? It is the heritage of the company and I do believe that we have

36:49 unique capabilities and unique skills in the sector. I was actually in a client meeting

36:56 in Davos, right, where, you know, a very senior telecom executive actually said to his CEO,

37:04 saying, nobody understands the telco business like TechEm does, whether it's on the network

37:10 side or on the front-end side or all the OSS, BSS stacks. We have a unique understanding

37:17 of it and we are also able to bring in, you know, capabilities like design, like Gen AI,

37:23 you know, in a very robust fashion to this market. We also have a very strong telecom

37:28 software business in Combiva. We have a network services business, which none of our peers

37:34 really have. So I do feel that we have a unique capability to offer to this market and it

37:38 will continue to be very significant for us. You know, I'm making sure, Atul Sinhaji, our

37:43 Chief Operating Officer, is making sure that we are investing to keep our cutting edge

37:48 in this business, from an IP perspective, from a domain expertise perspective. And we

37:53 remain very relevant to the 300 plus operators that we work across the world. It is just

37:58 that the sector itself has, you know, been struggling from a revenue perspective and

38:02 our performance is more indicative of the sector challenges rather than any specific

38:08 TechEm gaps.

38:09 Right. You know, just sticking to this sector, telecom has had, you know, structural issues

38:16 and this has been happening for a couple of quarters now. So from that point, do you see,

38:21 and as you said, BFSI is something that you want to grow. It's a big business for you,

38:25 more than a billion dollar now. Do you think there is room for probably to maybe reduce

38:30 some bit of telecom and the reason only I ask is because of the structural issues that

38:35 the sector is facing and probably you want to bring down that dependence from that sector.

38:40 No, no, we are not looking to bring down or to reduce the telecom revenue at all and telecom

38:47 will remain very, very central to TechEm. But if you look at the normal trajectory of,

38:52 you know, of TechEm as well, over the past five or six years, the percentage share of

38:56 telecom in our revenues has declined, right, and that is because other sectors have grown

39:00 faster. And at some point of time, it is going to normalize with our peer group, right, where,

39:08 you know, other segments are bigger. So it is just a natural process of evolution as

39:12 we grow our business and as we hit a certain size of...

Earnings Edge | Tech Mahindra Management Decodes Q3 Numbers | NDTV Profit

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