IT consultancy Tech Mahindra banking on AI rebound

It has been a tough period for digital transformation specialists and IT consultants Tech Mahindra with revenue and profits falling, according to the company’s latest financial results.

While the company rightly points to the battering that tech companies globally have taken in the last 12-18 months, it’s clear Tech Mahindra needs to turn a corner, but there is still plenty of positive news to suggest it is heading in the right direction.

Revenue was down 4.0% quarter-on-quarter, and 1.9% YoY, at US$1.6 billion. EBITDA was down a worrying 33.7% QoQ and 31.8% YoY, standing at UD$163 million.

Like many tech companies, headcount was down but not at a rate we have seen at some other tech businesses. Tech Mahindra lost just 4,103 employees in the quarter to have a total headcount of 148,297 (down 2.7%).

“Our results this quarter reflect the uncertainty in the global economy and the IT sector,” said CP Gurnani, Managing Director CEO, Tech Mahindra.

“We are confident that we have the right strategy and the right team to overcome this temporary setback and deliver long-term value for our customers and shareholders.”  

Tech Mahindra will be betting big on the restorative powers of AI, with several products and services in play that could help it turn results around – and fast. AI is the biggest tech story in town right now and any IT consultancy should be waiting for the uptick in business that will inevitably bring as organisations across the world scramble to get ahead and take advantage.

In that regard, Tech Mahindra should be in a better position than these latest results suggest.

One reason for this optimism comes from Tech Mahindra partner Microsoft, who earlier this week posted its best ever financial quarter in its 48-year history. The main reason for this success is Microsoft’s pioneering backing of Open AI’s ChatGPT generative AI platform that has gripped the globe. Microsoft’s billion-dollar investment in Open AI is starting to pay dividends, with US$800 billion added to the company’s valuation this year.

“Organisations are asking not only how – but how fast – they can apply this next generation of AI to address the biggest opportunities and challenges they face – safely and responsibly,” said Satya Nadella, chairman and CEO of Microsoft. 

“We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage.”

Tech Mahindra – betting big on AI

So why does Tech Mahindra have reasons to be cheerful when it comes to AI?

The company has unveiled Generative AI studio under its Tech M amplifAI0->∞ suite of AI offerings, giving customers access to code, text, image, video, audio and data in one solution, making it easy for businesses to leverage the Gen AI opportunity.

Tech Mahindra has also announced an integration with Microsoft to provide Generative AI-Powered Enterprise Knowledge Search under Tech M amplifAI0->∞, which utilises Microsoft Azure OpenAI Service, Azure Cognitive Search, and Azure Language.

The company is already winning new business based on AI. These include:

• A multi-year strategic deal from a leading Networking OEM in the US for managing their public cloud operations, including workloads for its fast-growing AI-based SaaS offerings.  
• Selected by a large retail company in the US for service desk management leveraging AI.  
• Chosen as a strategic partner by a leading tech company to augment AI capability by managing machine rewrites and content validation. 

Speaking exclusively to Business Chief in Dubai recently at the Tech Mahindra-backed Global Chess League, CEO CP Gurnani shared his strategy and insights. A keen player himself, he knows the importance of playing the long game and keeping an eye on the ultimate goal – a strategy that serves well on the chess board and in the board room.

Tech Mahindra seems to be making the right moves to make the most of the huge demand for AI enterprise solutions.

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