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Against All Odds

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C P. Gurnani, chief executive officer and managing director of Tech Mahindra, spoke with BW | Businessworld from Brazil — the Latin American country that hosted the football World Cup this year. Thousands of people from across the globe were parked in the country over June-July to watch the championship. But Gurnani wasn’t in Brazil on a leisure trip. His company, Tech Mahindra, was providing back-end IT support and services for the event, just as it did the last time around. 

Alongside the project, Gurnani was also working on expanding the company’s footprint in Latin America. He met several clients — both current and prospective — and took in the odd game whenever he could.

Indians can take heart from the fact that while the national football team did not come anywhere close to making the cut, an Indian IT company certainly did!

International expansion aside, Tech Mahindra has been enjoying a good growth rate. Growing at near industry-leading rates, it is competing with established players such as Tata Consultancy Services and HCL Technologies.

The company was, however, seen as a stolid one-trick pony until a few years ago. While it was successful in the global telecom services and support market, it struggled to branch out like some of its Indian peers. But much has changed. It is now part of Indian business folklore. How the Mahindras took over erstwhile IT giant Satyam amidst stiff competition and all the uncertainties that surrounded the company makes for a great case study. Battling court cases, retaining employees and clients, satisfying regulatory demands, even as they pulled off a smooth integration was no easy task.

The calculated bet against all odds has paid off quite handsomely. The net sales revenues of the consolidated entity have grown three-fold between 2010-11 and 2013-14. In comparison, yesteryear industry poster-boy Infosys didn’t as much as double its revenues during the same period.

Tech Mahindra today is a well-diversified IT services company across geographies. While telecom — its strong suite — continues to contribute 47 per cent revenues, it is now seen as a credible player in areas such as manufacturing, retail, logistics, banking, financial services and insurance after the Satyam acquisition. Tech Mahindra’s clients include British Telecom, AT&T, Vodafone, Honda, Mercedes Benz and Volvo.

Gurnani modestly declines credit for the company’s stellar performance. “It has been a collective team effort. There has been a buy-in from all stakeholders that has enabled our growth.” Like its competitors, it, too, is making investments in the SMAC (social, mobile, analytics and cloud) stack of technologies.

What sets it apart, however, are the calculated bets it is taking. For example, not many know that Tech Mahindra presently operates in 15 African countries, where it has delivery centres. While Africa still contributes only a small portion to its revenues, the company has made investments ahead of the curve. “While we currently continue to get about 45 per cent of revenues from North America and 32 per cent from Europe, Africa with its huge population and a growing economy is a very good opportunity. It is such bets that have paid off for us,” says Gurnani.

Such risk-taking is doing the company wonders. Apart from Satyam, it has acquired vCustomer, Hutchinson Global Services, Comviva Technologies, Complex IT and BASF Business Services. While tripling dollar revenues in five years is an impressive task, the company has publicly stated that its goal is to reach $5 billion in revenues by 2015-16. “To reach those numbers, a part of the strategy will clearly have to be inorganic. We are working on it,” is all Gurnani is ready to say for now. He is currently sitting on a war chest of Rs 3,600 crore in cash and can clearly raise more if required.

Integrating acquired companies with its current base of 630 clients and 90,000 employees will clearly be a challenge. Gurnani though sounds unfazed. “We have done a smooth integration in the past and we are confident we will do so in the future too even as we retain our unique values and DNA. The goal is to maintain the agility of a startup and have the maturity of a behemoth.”

If Tech Mahindra can pull that off, Gurnani will have more reasons to enjoy the next global sports tourney, wherever it takes place.

(This story was published in BW | Businessworld Issue Dated 11-08-2014)