Protectionism, trade wars not new in business: Tech Mahindra's C P Gurnani

Information Technology major Tech Mahindra reported a slump in its net profit at the quarterly results announcement on Monday, dragged down by a seasonal fall in its communications business. However, the fall in profit was capped by the continued strength of its enterprise business.
 
At a press conference, India’s fifth-largest technology services company reported a 26.5 percent drop in its sequential net profit at Rs 897.9 crore for the April-June quarter compared to the Rs 1,222.1 crore profit it posted in the preceding quarter. On year, net profit was up 12.4 percent. Revenue from operations grew marginally by 2.8 percent on quarter, to Rs 8,276.3 crore from Rs 8,054.5 crore in the previous quarter. It however, grew 12.8 percent when compared to the same period in FY17.

In a quick chat with managing director and CEO C P Gurnani at the sidelines of the press conference, he discussed the year ahead for Tech Mahindra, the importance of reskilling the Indian workforce, and about steering an IT company in an era of protectionism and potential trade wars. Edited excerpts:
 
Q: How do you feel about the first quarter performance of the company? Did you see any significant mergers and acquisitions (M&A) or brought on any significant new clients in the period?
We’ve had a spectacular quarter when it came to healthcare and manufacturing. We could have done a lot better in the communication sector but that’s not by design. It is more of a seasonal way that one of our big subsidiaries (Mahindra Comviva) works. I am conscious that I need to balance it out because most of the markets don’t understand the seasonality. So it’s best that we look at strategies to balance it out. But, overall, I think I’m satisfied with the quarter. We could have done more but there’s always a new day.

We added 13 new clients in the quarter. We haven’t done any M&As right now. We are looking at new opportunities and, honestly, this is the only team that has no predictions, no hard pressures. It is the only part of the company which has zero targets.

Q: In your statement you mention next generation technologies that will fuel the digital business further. Could you expand on that?
Our main focus areas are network of the future; data analytics as a service; cybersecurity—which has our greater focus—and blockchain. We have already won a lot of new deals in cybersecurity. And you’ll come across a lot of announcements [for blockchain] at the International Blockchain Congress in Hyderabad later this week.

Our TECHMNext [program to work with startups for new technologies, amongst other things] is about creating the platforms. We have already showcased these platforms to our customers and are providing the TECHMNext platform as a service—that means it is not only about selling a cybersecurity solution, but it is about running it as a service.
 
Q: You’ve been vocal about the importance of reskilling the workforce. Studies show most Indian graduates are unemployable; what needs to be done to make the Indian graduate competitive in the global markets?
Going back to the basics is the first way to change. If a Tiger Woods finds his [golf] swing is not perfect, he would go back to the basics. If you can’t communicate, you won’t be able to do well. It is also an aesthetics problem. We are ultimately creating the next generation of people. I think the quick fix that came in has to slow down a bit and reskilling has to take place. Data is ultimately mathematics and statistics. It determines the next solution. AI [artificial intelligence] is nothing but a software that was given thousands of chess moves, and so it learnt how to use it. Similarly, in my opinion, that is what you need to do with students in the third and fourth year—their alignment has to become better. Make them look at data and at open skills, and they will know where to orient themselves. I think that’s what I am missing from the industry and the academia.

Q: In the days of protectionism and potential trade wars, how to best steer an IT company?
For me, trade wars or protectionism have always existed. All these years [I have] always heard about tariffs being imposed. Now I know the World Trade Organization (WTO) has a role to play and that some governments tend to be aggressive in their own negotiations, but the reality is, it has always been a part of bilateral business. The two things, however, working in India’s favor are: India’s own buying power and you really have a very business-focused government. This means that bilateral discussions will continue and there will always be walls but I am sure, there’ll be gates too.