We're building incentive warchest to curb attrition: Tech Mahindra leaders

In a Q&A, MD-CEO C P Gurnani and marketing head Harshvendra Soin talk about growth drivers, managing supply side constraints and how acquisition is aiding access to key talent

IT services major Tech Mahindra’s Q2 numbers reflected a trend witnessed among peers. The company reported one of its best Q2 performances in a decade, said C P GURNANI, CEO & MD, Tech Mahindra. Like the industry, the company has also seen its attrition spike to 21 per cent during the quarter. In an interview with Shivani Shinde, Gurnani and Harshvendra Soin, global chief people officer, head-Marketing, talk about growth drivers, managing supply side constraints and how acquisition is aiding access to key talent. Edited excerpts:

The Q2 performance beat estimates, but the TCV (total contract value) looked softer. How do you see growth panning out in the next few quarters?

Tech Mahindra has four vectors of growth, or as I call out, four ‘Cs’. First is our own heritage of Mahindra British Telecom and hence a heritage connectivity and hence our focus of Connected Solutions. Two, we invested heavily in the Blue Marble platform, which we acquired from Vodafone. For customer experience management, we invested in agency business by acquiring BORN and we built all our experiences to create customer experience management solutions.

The third, for us, is cloud and if you look at all the major hyperscalers, whether they are AWS, Google, Microsoft or IBM, the growth is huge, hence that’s the third important vector.

And bringing all this together is compute power, which aids in the digitisation journey of our clients. So all the businesses revolve around these four, ‘C’.

And we indicated that the range of our TCVs will be between $700-900 million every quarter. And I think this quarter's $750 million, though not on the higher side, is within that range.

Can you give a break-up of the TCV signed and tell us where the growth is coming from?

It's been an all-round performance in terms of deal signing. Most of the deals we have signed are in the area of legacy digital conservation. In terms of geography, these deals are split across the US and Europe. So one of the deals that we have done is a multi-year strategic deal with a fortune 500 company, which is wanting to transform their legal legacy, global application and digitizing the core.

C P Gurnani, CEO & MD, Tech Mahindra

We have, similarly done one deal with an electricity distribution utility company, we have done a major deal with the telecom company in Germany. And we have also done a deal with the US telco to be part of their transformation journey, particularly to the cloud. So all I can say is that we have a good momentum and if there is a common thread, this time it has been more of legacy to digital transformation.

How significant is your acquisition strategy going ahead as you focus on new tech deals?

We will continue to use acquisition as a part of our strategy. We are also, as a matter fact, committed to bringing some of the acquired company leadership into the main management team. So the acquisitions are for capability as well as for management bandwidth, and for augmenting delivery capability. I think all three are at play.

Attrition at 21 per cent has really spiked. How are you dealing with it and making sure that supply side constraints do not hamper growth momentum?

As an individual I faced a similar challenge in 1998-99 and that was the time when we went to countries like South Africa and Australia to find the right skills. While we are again looking at near shore destinations to source talent we are also focusing on Tier-2 cities. But thanks to the acquisitions we have done, we have been able to increase our Latin America footprint.

Soin: It's an industry wide phenomena. The good news is that on a quarterly annualised basis our attrition has come down by 10 basis points for this quarter. So that's somewhat good news, although it's too early to predict anything. We are also seeing that the efforts we have put in have paid off.

What we have really done is to create a talent war chest where we are looking at targeted retention rather than, you know, giving wage hikes across the board. We are also looking at very interesting solutions like our ‘career acceleration policy’. Those who are able to upskill themselves in niche skills, we are saying that their salary can go up to 20 per cent.

We are also attacking attrition by creating a war chest by increasing engagement activities by looking at incentives for both the short term and the long term. We have hired significantly higher numbers at the bottom of the pyramid. Almost double of what we did in Q1 and we want to continue to do that and upskill them to take on higher roles. Secondly the whole hiring engine has been ramped up so our joining rate has actually doubled in Q2 from Q1. Even the offers doubled from Q2 to Q1 South. It was significant.

What would be your hiring numbers for this fiscal?

We are not really giving out specific numbers, but as I said, we are almost 2x of last quarter. So whatever we're hiring, we're almost doubling that this year.

One of the points CP made was that your acquisition strategy is also kind of helping you, especially when it comes to the new talent. Can you elaborate?

One, when you acquire a company, what is important is how we integrate them into Tech Mahindra. The focus is on making sure that they in their hearts wear the badge of Tech Mahindra. One is we continue with the brand name, so BORN is still the same company. The second thing obviously is how we ring fence the top talent and it could be again a mix of short and long term incentives. And third is really the culture aspect. I think the cultural aspect is very important.

What is your back to work strategy?

We have actually openly declared that till December coming to office is completely voluntary. Some senior management do work from office now, but there is no mandate to get anybody to office this year. We will take a call post December, depending on how the third wave impacts.