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Tech Mahindra (TechM), the country’s fifth-largest information technology (IT) services company, has put in place an aggressive strategy to win its earlier position in the banking, financial services and insurance (BFSI) segment.
The Pune-based TechM said it expected in a couple of years to position self as a leading vendor in the BFSI space and to increase its share of total revenue from 10 to 20-30 per cent.
In FY14, BFSI accounted for a tenth of TechM’s revenue of Rs 18,831 crore ($3.1 billion). Over a year, BFSI revenue at $300 million (Rs 1,830 crore) in FY14 grew around five per cent.
“Very clearly, the battle has just begun for us. If you look at the programmes we have put in place, we would want to achieve 20-30 per cent (BFSI’s share in overall revenue) in the next couple of years,” said Ravi Vasantraj, global head for BFSI.
The company is overly dependent on the telecom segment, its strong area. In FY14, telecom accounted for 47 per cent of overall revenue. The move to expand the BFSI practice is to cut its overexposure in the telecom space, growing at a slower pace.
Before the big accounting fraud surfaced at the erstwhile Satyam Computer Services (now part of TechM), it was considered one of top-three BFSI vendors in the country, with the segment accounting for a fourth of overall revenue. At the time, it lost a little over 50 BFSI clients.
Vasantraj, who joined the company after TechM acquired the scam-hit company in 2010, said they were keen to get back the position Satyam had in BFSI.
After acquiring Satyam, TechM (then Mahindra Satyam) put in place a three-pronged strategy — defend, invest and grow. It decided its strength was in the retail banking, payments and cards and asset management segments, while the weakness was in investment and commercial banking ones. So, it started investing in its strengths.
Under the borrow programme, it established alliances to use the expertise of partners in core banking, risk management, policy administration and mobility. TechM decided in the first two years, it would not sell ‘run the business’ services to Tier-I banks. It would focus on integrated services, with a combination of IT, business process outsourcing and infrastructure services.
The strategy seems to be paying. In 18 months, it is learnt to have won back 10 large BFSI clients serviced by Satyam before the accounting fraud came to light.
“The strategy is creating a differentiator and bundling together with the intellectual property and platforms, it has helped us disrupt some incumbents, the Tier-I providers,” said Vasantraj. “If you look at our order book and pipeline, it is at an all-time high."
FY14 FINANCIALS
- 1/10th of Rs 18,831-crore revenue made up by the banking, financial services and insurance (BFSI) segment
- 5% the rate at which BFSI revenue grew
- 47% of revenue made up by telecom
