C P Gurnani, managing director and chief executive at Tech Mahindra, to Romita Majumdar on growth strategy and recent developments. Edited excerpts:
Merger and acquisitions have been a steady part of your growth strategy. Will it continue so?
The focus will always be organic growth. Yes, inorganic will be a part of the growth strategy and we are looking at more acquisitions in the digital platforms. Currently, our strategy is to build platforms. We have already built those that offer process as a service and built eco-systems with next-generation, new-age companies, as well as established players. The strategy is to build an eco-system to serve unique customer needs for digital platforms.
Software headcount has come down by almost 10,000 over the year. Will this continue to be the way ahead, with automation and digital solutions in place?
We have seen certain businesses require a lot of headcount addition at the beginning and it then starts to taper. I might need a few hundred people initially to train and work on a new project, to thoroughly understand a system. Once the system is running, I need fewer people to operate it. Earlier, revenue was proportional to manpower but, today, the nature of the business will be cyclical when it comes to manpower. It doesn’t mean jobs are not being created. If we are doing more digital transformation deals, the headcount will vary. It is not possible to give a projection on adding of headcount but the fresher intake continues to be high and there is a desire to increase strength continually. It will, though, be increasingly skill-based hiring.
The on-site ratio rose marginally. Is that due to H-1B (American job permit) restrictions or are you consolidating the workforce globally?
We have invested a lot lately on onshore centres, as in Canada, Israel, the US and Europe. Digital by itself requires smart, agile and development kind of scenarios and we are investing to meet those needs. One of our biggest customers, British Telecom, adopted an agile methodology in 2005-06, which meant we needed the teams to work closely. We might not be looking at collapsing of workspaces (across places) but we are definitely looking at a (more) collaborative working environment.
The communications segment continues to be flat. What is the way forward?
A lot will depend on 5G implementation, as it will drive the next wave of capital investment in the sector. Our investment in Altiostar, which is virtualising radio networks, shows our approach is driven both by hardware and software. As video and data consumption continues to go up, telecom companies will be forced to provide the capacity. Also, the penetration of Wi-Fi across the country means a need for service providers like us who provide design engineering services in communication. The spread of connected devices will provide an upward trajectory for communication services.
As GDPR goes into force today, what impact is it likely to have on your business?
GDPR (General Data Protection Regulation, a European Union law; it also addresses export of personal data outside the EU) is an opportunity for us. To me, the opportunity is the fundamental need for data protection, which obviously means our cyber security practice will gain from this implementation. There could, of course, be some challenges but we have a robust team working with our clients to make sure we are compliant (with the law). The collaboration with an Israeli company is more about GDPR and requires more focus on the European business as part of our digital strategy.