Tech Mahindra -Quarterly Update
Who Is This Quarterly Update For?
NelsonHall's Quarterly Update on Tech Mahindra provies a snapshot of developments at the company in the last quarter. It accompanies NelsonHall's more comprehensive Key Vendor Assessment program.
Both programs are designed for:
- Marketing, sales and business managers developing strategies to target service opportunities within the BPO/IT Services market
- Sourcing managers monitoring the capabilities of exisitng suppliers of IT outsourcing services and identifying vendor suitability for IT services
- Consultants advising clients on vendor selction
- Vendor marketing, sales and business managers looking to benchmark themselves agaisnt their peers
- Financial analysts and investors specializing in the BPO/IT services
Key Findings & Highlights
Q4 FY results: CC y/y topline growth slows to 6.2%; Margin expansion continues as network services business is turned around and productivity improves; IT services headcount down 12.6% y/y
Revenues were up 6.2% y/y in CC, including first-time contributions from HCI and the 10-year IP partnersship agreement with IBM
- Communications sector now <42% of total revenues. Has been exiting some unprofitable activity in network services
- Manufacturing remains the key growth sector for Tech Mahindra delivering double digit growth
Divestment, contract exitis and acquisitions drive big y/y change in the 'run-change-grow' revenue mix
Significant margin expansion as profitability in the network services business improves, and utilization reaches 84%. A second quarter of a significant level of reduction in IT services headcount does not full explained by automation and rationalization in the network services business also in sales and support headcount. While this has benefited margin, it puts pressure to deliver with 'just in time' hiring. A fresh intake of trainees starts next quarter. With it 'New Age Delivery Model' (see our blog), tech Mahindra is also looking to build an ecosystem of 'capability partner' for some softwar development activity.
A '3-4-3' framework is being used to determine investment priorities for each target vertical (see blog).
As part of its 'Networks of the Future' iniative, has invested in minority stake in Altostar Neworks
Further acquisition activity is likely in FY19
Scope of the Report
The report provides a quarterly update on Tech Mahindra, looking at
financial performance and key developments during the period. It accompanies NelsonHall’s Key Vendor Assessment program which looks at Unisys’ IT and BPO offerings, capabilities, and market and financial strengths, including:
- Identification of the company’s strategy, emphases and new developments
- Revenue breakdowns
- Analysis of the company’s offerings and key service components
- Analysis of the profile of the company’s client base including the company’s targeting strategy and examples of current contracts
- Analysis of the company’s strengths, weaknesses and outlook.
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