AI impact: Tech Mahindra to cut BPO staff by 5,000 despite rising revenues

Despite rising revenues, IT major Tech Mahindra is set to reduce its business process services (BPS) headcount by 5,000 to 38,000 in FY 2020-21, as a larger part of the tasks get completed through automation and artificial intelligence.

Company executives said there is a "non-linearity" between revenue growth and overall headcount as technology makes it possible for a single individual to accomplish multiple tasks.

It can be noted that the business process outsourcing (BPO) vertical, which has its genesis in the 'call centres' business of the past, is one of the biggest employment generators in the technology space, where Indian executives handle a slew of processes for overseas clients often across time zones.

Tech Mahindra had reported a reduction of nearly 2,500 people in its overall headcount in the December quarter, and attributed a bulk of the job losses to the BPS vertical.

"what has happened is I used to have around 43,000 employees at the end of FY20, at the end of FY21, I expect about 38,000 employees in BPS. But that is because the productivity has increased and the revenue has also gone up," its chief executive and managing director C P Gurnani told PTI.

He added that the same trend of reducing staffage may not continue in the forthcoming period and the headcount may stabilise, even as the revenues continue to grow. In the December quarter, the company had reported an 11 per cent growth in BPS revenues as compared to the preceding September quarter.

Gurnani said each one is looking at better productivity and efficiency at present and stressed that the productivity of each employee has increased. He said each of the employees accomplishes more tasks at present and is assisted by a chatbot which is developed in-house.

Its president for BPS, Ritesh Idnani said automation, analytics and artificial intelligence have become very critical for a customer's operation, and added that TechM is cannibalising its existing revenues through automation and delivering desired outcomes for the customers.

"As we deliver more on that, you will see that there is a non-linearity between revenue growth and headcount," he said, pointing out that the same trend has played out in December and September quarters, where the headcounts went down.

He said the BPS business is a robust one and the company is at present looking at its strongest pipeline of contracts ever as companies look at outsourcing more work.

Meanwhile, Gurnani said the company has surrendered some rental space in the last few months since the onset of the pandemic but the gains out of the same are not very high.

It is maintaining the campuses because of a feeling that eventually up to 40 per cent of the workers will come back to working from offices because of their desires or client requirements and added that the big facilities also house its work servers.

Gurnani said the company can now partner with any of the top 5G telecom service companies in the world now and added that he is not concerned with the delay in revenue booking from a part of the 5G business where TechM has made upfront investments.