Tech Mahindra’s blueprint for growth leans on industry expansion and GenAI

In today’s rapidly evolving technology landscape, smart organizations seek help from their partners, leading to the growth of technology arbitrage. Leadership and strategic direction have never been more important for leading IT service providers. To that end, it is notable that in March 2023, Tech Mahindra appointed Mohit Joshi as its MD and CEO designate, which will see him take the reins when his predecessor retires this month.

In a recent Fireside Chat, HFS CEO and Chief Analyst Phil Fersht connected with Mohit to understand his perspectives on the market landscape and how he will shape the future of Tech Mahindra as it adapts to the new business landscape—and why enterprises should be interested.

Mohit Joshi’s experience in financial services is pivotal to Tech Mahindra’s industry expansion

Almost 40% of Tech Mahindra’s revenue composition is driven by its communications business, stemming from its deep heritage in the telecoms industry; Tech Mahindra was originally founded in 1986 as a joint venture between Mahindra & Mahindra and British Telecoms (BT). This laser focus on a single industry allows Tech Mahindra to nurture deep domain expertise and build long-term relationships with market leaders, but it also increases exposure to market shocks and leaves scope for significant expansion into other key industries.

In Exhibit 1, we can see nearly 40% of Tech Mahindra’s revenue is from communications. The remaining portions are fairly balanced, with banking, financial services, and insurance (BFSI) and marketing being the next two largest industry groups, each contributing 16% of the provider’s revenue over the past 12 months. The provider already has a foothold in key industries, but expansion opportunities remain.

Exhibit 1: Almost 40% of Tech Mahindra’s revenue is driven by the communications sector

Source: HFS Research and public sources, 2023

Tech Mahindra’s leadership has recognized this opportunity. In the Fireside Chat, Mohit revealed plans to carefully expand Tech Mahindra’s reach into a handful of key industries, namely BFSI and healthcare, although he noted the importance of maintaining Tech Mahindra’s position in telecoms. Mohit built Infosys’ financial services business over the last 15 years, which reported consistently impressive growth. He expects his experience to be a key driver of success moving forward, advising that we should expect similarly impressive growth from Tech Mahindra in the not-so-distant future. The relationships he built with key leaders over the last decade could be pivotal.

Given that BFSI is one of the largest spenders on IT services globally, successfully growing the BFSI business could become a real growth driver for Tech Mahindra as we begin 2024. However, industry expansion alone won’t be enough for the provider to drive substantial revenue growth, which is why it is looking elsewhere, too.

Generative AI will be a key growth driver for Tech Mahindra

Much like his peers, Mohit believes generative AI (GenAI) will be positive for the whole industry, particularly Tech Mahindra. Much like its peers, Tech Mahindra is exploring areas where it can deploy the technology within its service lines, but its unique ability to pull on the entire weight of the Mahindra Group to drive innovation could be a key differentiator. Assessing each arm of the Mahindra group, Mohit advises there are endless opportunities to deploy GenAI within its organization; for example, GenAI could drive new efficiencies in Mahindra Auto’s manufacturing facility in Chakan. While this would be a net positive for Mahindra Auto, for Tech Mahindra, it presents an opportunity to experiment with the technology without being hindered by red tape and requirements typical of regular provider-client relationships.

According to Mohit, Tech Mahindra’s research labs are already building their own large language models (LLM). For example, the provider recognized that most LLMs focus on languages like English, so it is working to build an LLM with Indic languages at the core, which Mohit believes would be a first. He explained that Tech Mahindra is even working to develop a selection of industry-specific GenAI platforms. It will be interesting to see how these tie into its industry growth plans, and the provider plans to cocreate even more offerings with its clients and partners.

The Bottom Line: Enterprises should take note of Tech Mahindra’s strategy and expansion plans, particularly if they have GenAI ambitions in BFSI.

Strategic changes at leading IT service providers should always catch the eyes of savvy enterprises, as one might just present a new opportunity to partner with an innovation-hungry provider with expanding expertise. Mohit believes staying paranoid is the key to surviving in his market and that paranoia will position Tech Mahindra well to navigate any more “surprises” as it looks to build a diverse and resilient business.