IT services company Tech MahindraNSE -0.64 % saw a muted first quarter, with tepid revenue growth and narrowing margins. It is now hoping some of its bets in areas including 5G technology and cyber security will pay off.
Tech Mahindra CEO CP Gurnani said 5G, blockchain, cyber security, AI and engineering services, will help the company speed up growth over the next few quarters. “At this stage, these are key priority areas,” he told ET in an interview.
You didn’t have a very good last quarter. What is impacting the business environment? What are the challenges and opportunities?
As far as Brexit (Britain’s exit from the European Union) is concerned, there is bound to be an impact…the point is whether and how much it will be counter-balanced by the rest of Europe. The assumption is that consumption will continue to hold up. There could very well be opportunities in the new regional paradigm.
I think the three major factors today are – the debate around globalisation and de-globalisation, and the overall geo-politics playing out; second, the need for right skills, and finally, fluctuating currency. In all of these, there is an opportunity for everyone and it depends on how you approach it – each company will have its own strategy.
How much do you see digital businesses contributing?
Digital continues to be our constant focus area, contributing 36% of the total revenue currently. Our aim is to take it all the way up to 50% of the overall revenue.
What will be Tech Mahindra’s strategy?
Tech Mahindra is bullish on 5G. We are betting on new-age technologies like engineering services, cyber security, blockchain and on processas-a-service.
So far as 5G is concerned, it’s just a question of time. 5G is ultimately a 2020 play — 2019 will be more of a warm-up and that’s why the 5G labs we have set up with our partner network and on our own will play a critical part in our readiness to offer 5G solutions and services as demand ramps up.
Next year is almost upon us. Do you see a multiplier effect of the bets you are taking?
We see a big opportunity in ‘5G for enterprise’ — we are doing road shows in Europe and the US along with our partners. 5G can unleash new business possibilities and experiences like never before.
5G pilots will continue in 2020, but in my opinion major players in the US, for instance, AT&T, Verizon, T-Mobile and Sprint, would have rolled out 5G in phases, if not completely.
What exactly is Tech Mahindra delivering in 5G?
All businesses are around network services sharing. There are two approaches to it — one is the traditional hardware, which is what some players (like Huawei, Ericsson) have opted for. Our focus is on a softwaredefined networks approach along with our partners.
For us the three clear business imperatives are — ‘5G for enterprise’, which means we work with the local telecom providers and develop a 5G-powered smart factory or smart healthcare or a smart city.
The second part is ‘5G for telcos’ wherein we are enabling telecom providers to roll out 5G, which is where the traditional network services also come in. The other important part is to be more of a system integrator for portions of that network. Tech Mahindra will have an anchor role to play in all three.
With 5G, will the contribution from telecom business go up?
For us ‘5G for enterprise’ and ‘5G for telcos’ are going to be equally important from a business point of view. Ultimately, whether telecom is actually going to become a horizontal or a vertical is an interesting landscape to watch.
I am just saying that the landscape is changing, and it very difficult to come to conclusions just yet.
What about big data, Artificial Intelligence (AI) etc? How will these play out?
You cannot take out AI, Cloud and data from anything that you do. 5G is a physical usage of an application, AI is the oxygen that is required if you want your business to stay alive. Data is the blood flow without which it is impossible to survive. AI and data sciences work in tandem in today’s digital world and are embedded in everything.
So, what I am saying is that new-age technologies are interdependent. People talk about the cloud or Artifical Intelligence (AI), 5G and Blockchain, which are necessities now. The amount of data that 5G will produce will have to be understood, analysed and put to use. Also, cyber security and blockchain will be critical. AI is now becoming mainstream.