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Tech Mahindra Caselet

MAHINDRA INFORMATION TECHNOLOGY SECTOR

TECH MAHINDRA - MOVING TOWARDS A NEW REALITY
Mahindra Groups Information Technology Sector comprises Tech Mahindra,
Bristlecone, and 42 more subsidiaries & associate companies. This caselet pertains to
the Tech Mahindra business, and is independent of the other caselet on Mahindra
Comviva.

BUSINESS BACKGROUND
Information technology is playing an important role in India today, having transformed
India's image from a bureaucratic economy to a land of innovative technological
solutions. India is one of the biggest Information Technology centres of the modern
world, with over 2.5 million people directly working for the sector, and all leading IT
players having a significant presence in India.
Mahindra has been one of the early movers in the IT Sector in India. Founded in 1986
as Mahindra British Telecom, Tech Mahindra has evolved into a multinational provider of
Information Technology and Business Process Outsourcing Services, with over 800
customers in 90 countries spanning 60 nationalities. With the radical move to acquire
and eventually merge with Satyam in 2013, Tech Mahindra became the 5th largest
software service provider in India, with revenues of USD. 4 Billion and profits of USD.
474 million last year. Tech Mahindras core activities span Business Support Systems
(BSS), Operations Support Systems (OSS), Network Design & Engineering, Next
Generation Networks, Mobility Solutions, Security consulting and Testing. The Solutions
Portfolio includes Consulting, Application Development & Management, Network
Services, Solution Integration, Product Engineering, Infrastructure Managed Services,
Remote Infrastructure Management, BPO-Services & Consulting and Big data analytics.
Forays into emerging technologies such as Internet of Things has also been made.
LIVE CHALLENGE: MOVING TOWARDS A NEW REALITY
The last decade has been very eventful for technology in general and IT in particular.
The advancements in technology have greatly impacted Tech Mahindras core business
of IT Outsourcing, as it has done to the other leading players in the same area. The
evolution of the Indian IT Business Model can be viewed in distinct phases: In the
period between 1980-2000, the core of the model was the technical talent arbitrage the availability of technical talent in India, at a fraction of the cost the clients were
incurring at their markets. Pursuing this model, Indian IT Companies achieved a great
amount of success, while the model itself evolved over time in phases.

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In the early 1980s, technical talent was shifted to the markets where the work was
available, at a lower cost than what the local talent would demand (or to fill a gap in
availability of local talent.) The inherent skill in Indian talent, coupled with a meritocratic
environment found in the developed markets, propelled this model into a tangible
success for clients. With the evolution of technology and improved confidence in
delivery, clients started shipping work offshore to the modern IT Campuses located
across India, creating the Onsite-Offshore hybrid model. As the hybrid model worked
well too, saving costs and improving delivery for the clients, fully Offshore models came
into being. Over time, the actual nature of services offered itself changed with
technology - first starting with a big wave of Y2K Services, leading up to more core and
critical IT & BPO processes for clients. Countries such as Philippines emulated the
Indian model over time.
The last few years however, have seen a sea-change in technology and its impact in
the life of people around the world. As Internet completes 20 years in its existence, the
technology of the internet itself, as well as its usage, is changing radically, disrupting
industries around the world. Daily activities such as booking of tickets for travel or
entertainment have gone through radical change - the days when we used to stand in a
queue to buy tickets for a train journey or a film seem so remote now. Similarly,
Banking, and the way people consume media has changed significantly, culminating in
e-commerce, where the new norm is not to own the asset anymore, but know how to
sweat the asset. Large Corporations from around the world, that are large clients of the
Indian IT Industry - both Tech Mahindra and their competition - are going through a
similar change, driven by the survival need to find new ways to efficiently interface with
customers, and reengineer internal processes for a digital-centred world. New
movements such as Cloud, Automation etc. are derivatives of this new paradigm in
which businesses have to operate in. Today everything we can imagine is accessible at
the click of a button, causing businesses to be ready for constant customer interface,
aligning themselves by going digital even in their internal processes.
Let us imagine concentric circles: If we consider the outermost ring to represent
Verticals - the various industries that IT Services caters to; the next inner ring to be
Technology - IOT, Automation, Cyber Security etc; a further inner ring of Business
Process - Supply Chain, Manufacturing, Financial etc. the core of such a circle would
be Knowledge - of domains and processes. The biggest value created by a
business is when the knowledge of domain, process and analytics interact to
create a new business paradigm for the customers. In the past, IT companies were
challenged to create cost-effective lines of code. But as the paradigm is shifting from
ownership of assets to delivery of solutions, IT companies are faced with a new

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reality, where they do not need to own large assets to deliver solutions. Resources such
as Data Centres for example, can be accessed as a service with speed, which
fundamentally changes the way businesses are operating & enabling new solutions.
Another big change from the past is the level of familiarity that Business Leaders now
have with technology. By using technology as consumers - say for booking tickets or
using social media etc. - Business Leaders now appreciate the power of technology far
better than in the past. New Value Frontiers are now being created by disrupting the
traditional ways of doing business, based on analytics and insights. The interplay of
forces of domain, process and analytics is redefining the business paradigm, disrupting
traditional ways of doing business and creating New Value Frontiers.
At another level, let us take the example of an air conditioner at home. The usual
maintenance cycle is annual - checking, refilling of gas etc. But, using simple sensor
technologies available today, we can know the real usage before the next maintenance
is due, saving costs of needless maintenance. When we take this paradigm to the next
level - Machines in operation in Production, Airplanes, Trains etc. - just the value of
information on usage of machines could mean billions of dollars in saved costs.
Technology has moved the needle from just delivering IT Services, to enhancing
Operations, which includes efficiency as well as user interface. Business Leaders are
now using transaction history to identify patterns that drive their proactive or reactive
decisions.
In the past, Information Technology was a support to the Operations function becoming
more effective, with the available technologies of the day. The role of IT today has
evolved to delivering new efficiency paradigms for Operations, leveraging technology
advancements and interconnectivity. The challenge before IT now is to define decision
points that will enable companies to compete more effectively and outsmart competition.
Success in this paradigm is not only about people who can code efficiently, but about
creating solutions that are scalable both within and across customers. In this new
Solution driven paradigm, the companies that get it right sky-rocket ahead of others
and capture a disproportionate share of the market. Making mistakes can cause one to
lose very rapidly too. The challenges of business has changed, and so has the
challenges of IT companies that serve these customers.
Looking back 2 decades, in the first phase it was about Indian Talent, in the second
phase it was about the ability to scale up rapidly and work offshore. But now the game
is not about IT - it is about Solutions that are cutting edge for business - and to do that,
are you willing to invest, be a partner and solve problems of clients in such a way that
they sweat their existing assets better? This is the new paradigm of the IT Services
Business, that is starting to emerge globally. The Indian IT Services Industry is at an

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inflection point, where its core Business Model, centred around Arbitrage & people at its
core. But now it is about doing it very differently, and managing the Innovation cycle that
it entails for clients. This new paradigm is not just in the way clients buy IT services - it
is also about the way in which new, innovative IT Solutions are built in this space.
Online marketplaces such as Upworks connect 200,000 customers to over 12 million
skilled talent - either individuals or companies, bidding for the work. Movies such as
DieHard 4 feature plots based on similar approaches, where the villain gets multiple
people to build a core, and orchestrates actions to shut down New York city and hold it
to ransom. It is no longer about Project Management, but about the ability to orchestrate
actions to create solutions using expertise both within and outside the company.
The situation that is emerging in IT now, is akin to the situation faced in Advertising of
products many decades ago. When Television technology was new, there were one or
few channels and it was easy to advertise in them. But today, there are thousands of
channel options with eyeballs distributed across all of them - yet people are spending
lesser time on TV and more time on Mobile, Internet and Social Media - complicating
the challenge into creating a comprehensive media solution for impact. A similar
complication is coming into the IT Services business, where it is no longer about IT but
about Business Solutions.

Given this background, how is the future of IT Services landscape likely to

evolve? How will the Indian IT Industry be affected by this? Will it destroy the
Indian IT success story, or will it open up new opportunities for even greater
success? How should IT Companies in general and Tech Mahindra in particular
reinvent itself to evolve into this new paradigm? How should the trade-offs be
managed - for instance, should Tech Mahindra invest further in the old paradigm
(eg. acquisition of a call centre) or focus only on the new paradigm (say, building
a command centre).
Present a detailed strategy and road-map for Tech Mahindra to reimagine itself, to
be a leader in this new solution driven paradigm of Information Technology.

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