We will have 15-20 mini CEOs soon: Vineet Nayyar

Interview with Executive Vice- Chairman, Tech Mahindra

Tech Mahindra followed its peers in the information technology sector and reported a good set of numbers for the third quarter of FY14.

Vineet Nayyar, executive vice-chairman, talks to Gireesh Babu about the growth and the results. Edited excerpts:

What has worked for the company during the quarter?

Telecom, manufacturing and BFSI (banking, financial services and insurance) have been our strong suits and they have done well for us. That accounts for our growth of 4.4 per cent for this quarter. Add an improved economic situation in the US and Europe, deciding they would now need to take assistance from India to remain competitive, also helped. Europe is feeling if they do not change the way they function, they might become non-competent. If they want to grow and maintain exports, they will have to do smart sourcing and we are part of the smart sourcing system.

How has Europe done in the quarter?

Our growth in Europe in telecom was 3.8 per cent; it used to be two to three per cent. We won that big deal from KPN, both in Netherlands and in Belgium, and we had transition, which we were not paid for. Now, we are fully paid for and are getting returns on that. It shows in the numbers.

How do you see the growth in telecom?

Telecom is becoming the lifeblood of the global economy. Telecom and telecom technology is going to be not only important for individuals but for enterprises and, therefore, there is going to be growth in that area.

What is the update on BT (former British Telecom)?

Pretty straightforward. Our revenue from BT is coming down; we’ve said so earlier. The good part is, our share in the expenditure on IT is going up. We are losing but other companies are losing even more because we maintain our proportion and, in fact, it has grown.

There is going to be a bit of a ramp-down because BT is transforming itself. So, as we grow, we will also take into account other areas, which BT is doing.  Especially when it comes to their go-to-market, we will be working with them, in their global services.

What are the plans in the other two sectors, BFSI and engineering?

BFSI has grown well for us but is still number three, in terms of where we are. Engineering is number two and we are doing very well there. We are trying to grow in all three – telecom, engineering and BFSI. Hopefully, they will continue to grow.

Last quarter, we had good growth in insurance and in banking. The numbers of our accounts went up. Similarly, we had very good growth in engineering. Also, when you reach a certain size, you are seen as a principal supplier and once that happens, companies come to you automatically. It becomes easier.

For example, in telecom, there is not a single big tender which goes where we are not invited. The telecom companies themselves want us to come. It is also happening in engineering. We are not there yet in BFSI but, hopefully, we will.

Could you elaborate on the writeback during the quarter?

We made a provision for around Rs 120 crore earlier as tax to be paid to the government. We’ve now been advised by our lawyers that is not necessary.
 
What is the latest with your mini CEOs strategy?

To find young, talent-driven people who don’t want to be specialists, who are innovative. And, let them head small operations and manage it end to end, be responsible for growth and profitability. Then, these guys will become the talent pool for bigger units. We have five mini CEOs but we will be growing the number. We will have 15 to 20 very soon.