Vineet Nayyar on why Tech Mahindra needs to train younger staff

India’s fifth largest information and technology (IT) services provider Tech Mahindra has surprised the Street with better revenue and net profit in the July-September 2015 quarter on the back of improved operational efficiency.

Tech Mahindra’s vice-chairman Vineet Nayyar(below left) talks to Sadananda Mohapatra about the company’s strategy to maintain growth. Excerpts:  

Much of your growth during the quarter was driven by operational efficiency in terms of cost minimisation and improvement in employee utilisation, which grew 300 basis points to 77 per cent. Do you see further headroom to improve this?  

The rise shows we had some headroom to improve utilisation and we did that. We will continue to do so whenever there is a possibility to increase utilisation, but it can’t be beyond 80 per cent.  

An improved utilisation indicates lesser hiring. What is your total campus hiring target for this year?  

If my utilisation is higher I will hire less. We have already hired 1,000-plus in the current financial year and our target is 5,000.  

The company management seems to stress more on operational efficiency. Can you elaborate on the measures the company will take to improve operational parameters?  

The measures include higher utilisation, more automation, and creating more platforms so that a job of 10 people can be done by five persons.

Utilisation and automation are the key focus areas for operational efficiency, but that does not mean we’re not looking at growth. Growth, as well as operational efficiency, is important for us.  

What about inorganic growth? Is the company considering acquisition of companies specialising in digital technologies?  

We’re always in dialogue with one company or two for acquisition. Acquisition depends on multiple factors including cost.

We have made acquisition earlier and that has worked for us.

We will do so if we see there is an opportunity.  

All other IT companies are interested in digital technologies and have created the necessary human resources for it. What is Tech Mahindra doing in this area?  

Digital services is a tectonic shift in IT services and it earns us about half a billion dollar a year. We are training a fair amount of people in this area, especially the younger ones to be ready for such projects.

They are also interested to learn the technology as they know the future lies there.