INDUSTRY ANALYSIS REPORT – Information Technology SECTOR

Tech Mahindra

Submitted in partial fulfilment of PGDM 2018-20 in

SVKM’s NMIMS

School of Business Management, Hyderabad

Submitted By: Guided By:

Mannu Mohit Dr. Kavita Kulkarni

80303180124

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Preface
This project report attempts to bring under on cover the entire hard work and dedication put
in by me in the completion of the project work in the Industrial Analysis of the IT Industry,
primarily focussing on Tech Mahindra. Seeing the scenarios of the US H1B Visa impacting
the Revenues of IT Firms, this sector was chosen on that behalf to understand the impact on
the industry of the same.

As we all know that the IT Industry has the leading share of India‘s exports to the US and
European market, there is a lot of forex reserves coming in the country. Moreover, this sector
has grew with a tremendous pace of aggregate 9% compounded per year since 2009, which
shows that it has enough room to grow even now.

Once we understand how this Industry has gone through certain changes and challenges it
faced, it becomes easier for us to understand how it is going to impact the Indian Services
Industry. In order to achieve the goal of $350 billion in revenues, the companies in the
industry must know the areas it needs to work and in-depth analysis with detailed information
is to be conducted to make a necessary and well informed decision.

The main objective behind choosing Tech Mahindra and the IT Industry is to study about
various firms in this sector, the kind of services they provide to their customers and where the
future lies for them in the next decade.

Mannu Mohit Hyderabad

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Acknowledgment
The time I spent in preparing this report was an enriching experience for me and it helped me
discover so many things in this particular industry. Through this report, the learning‘s gained
through this report will forever shape and influence my professional life while fostering
personal growth and development.

In my desire to write this report, I have in no way any claim to come out with a perfect piece
of work. These few details lead me to realise that, like all human endeavours, this report is
not perfect and may contain errors and shortcomings. Thus, I remain open to all criticisms
and suggestions which could present me with new sources of inspiration as I develop in my
ability to research and learn.

This project would not have been possible without the contribution and collaboration of
others. First of all, I would like to thank Almighty, to give me good health, energy and show
me direction in the working of the project. I would like to thank my parents for having stood
behind me through all the emotional and financial support.

I am also thankful to Dr Prtihvi Yadav (Director, NMIMS Jadcherla) for giving us an

opportunity to do the project on Industry Analysis. I would like express my gratitude to thank
our guide, Dr. Kavita Sasidharan Kulkarani (Assistant Professor) who guided me throughout
the project and gave valuable suggestions until the completion of the project. I would also
like to thanks all my teachers, friends and batch who directly or indirectly assisted me in the
completion of the project.

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Executive Summary
The Indian Information Technology (IT) and Information Technology enabled Services
(ITeS) sectors go hand-in-hand in every aspect. The industry has not only transformed India's
image on the global platform, but also fuelled economic growth by energising higher
education sector (especially in engineering and computer science). The industry has
employed almost 10 million Indians and hence, has contributed a lot to social transformation
in the country. Furthermore, Indian firms, across all other sectors, largely depend on the IT &
ITeS service providers to make their business processes efficient and streamlined. Indian
manufacturing sector has the highest IT spending followed by automotive, chemicals and
consumer products industries.
Furthermore in-depth industrial analysis of Tech Mahindra has been done. Infosys is one of
the most famous consultancy firms in the IT sector. For the analysis of the company various
parameters such as market size, market characteristics have been considered. The report also
tells about the various marketing trends of the company, its market structure, characteristics
of each competitor and their behavioural traits. Each company is governed by various
industrial metrics.
Industry body National Association of Software and Services Companies (Nasscom) predicts
that the ITeS industry will bring in around US$ 225 billion by 2020, wherein 80 per cent of
the growth would come from the presently untapped sectors and regions.

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Table of Content
Preface……………………………………………………………………………………….(2)

Acknowledgment…………………………………………………………………………….(3)

Executive Summary………………………………………………………………………….(4)

Chapter 1 Introduction

1.1 Overview of the Sector…………………………………………………………………..(6)

1.2 Overview of the Company……………………………………………………………….(6)
1.3 Overview of the Potential and Growth of the Sector…………………………………….(7)
1.4 Overview of the Main Players………………………………………………………...…(7)
1.5 Overview of Trends in the Sector.............................................................................(8)
1.6 Companies in Hyderabad…………………………………………………………..…(8)
1.7 Overview of Employment Opportunities in the Sector for a fresh MBA………….(8)

Chapter 2 Introduction and Competition

2.1 Market Size and Characteristics…………………………………………………………(9)

2.2 Market Trends……………………………………………………………………………(9)

2.3 Market Structure……………………………………………………………………….(11)

2.4 Characteristic of Competitors…………………………………………………………..(13)

Chapter 3 Industry Analysis

3.1 7Ps………………...……………………………………………………………………(14)

3.2 Competitive Rivalry……………………………………………………………………(16)

3.3 Parth Breaking Information Advancement……………………………………………..(18)

3.4 Value Chain Analysis…………………………………………………………………..(21)

Last Chapter – ‘Findings and Projections‘

4.1 Findings……………………………………………………………………………….(24)

4.2 Forecast……………………………………………………………………………….(24)

Summary………………………………………………………………………………….(26)

Annexure:

Bibliography……………………………………………………………………………….(27)

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1) INTRODUCTION
1.A) Overview of the Sector

Information technology in India is an industry consisting of two major components: IT

Services and IT enabled services (ITES), more commonly known as Business Process
Outsourcing. Information Technology that enables the business by improving the quality of
service is IT enabled services. The global sourcing market in India continues to grow at a
higher pace compared to the IT-BPM industry. India is the leading sourcing destination
across the world, accounting for approximately 55 per cent market share of the US$ 185-190
billion global services sourcing business in 2017-18. Indian IT & ITeS companies have set up
over 1,000 global delivery centers‘ in about 80 countries across the world.

More importantly, the industry has led the economic transformation of the country and
altered the perception of India in the global economy. India's cost competitiveness in
providing IT services, cost savings of 60–70 per cent over source countries, continues to be
the mainstay of its Unique Selling Proposition (USP) in the global sourcing market.
However, India is also gaining prominence in terms of intellectual capital with several global
IT firms setting up their innovation centers‘ in India.

1.B) Overview of the Company

Tech Mahindra limited is a publicly traded company of Indian origin. It is associated with IT
consulting and services industry and was founded in the year 1986 by its founder Anand
Mahindra. Tech Mahindra is a subsidiary of its parent company Mahindra Group. Tech
Mahindra takes the call when communications companies need help. Its IT service portfolio
encompasses application development, consulting, infrastructure management, managed
services, and systems integration. R&D operations oversee product development, lifecycle
management, and testing. Its business process outsourcing (BPO) unit, which accounts for
just 10% of sales, handles tasks ranging from customer service and human resources to
bookkeeping and back-office processing.

April 13, 2019 marked the 10th anniversary of one of the biggest events in the corporate
history of India - the acquisition of Satyam by Tech Mahindra. Prior to the acquisition, Tech
Mahindra was a niche player that derived 100% of its revenues from the telecom vertical. On
the other hand, Satyam was the fourth largest Indian IT services company in terms of
revenue, listed in both the Indian and US stock exchanges. It had over 50,000 employees with
operations in 66 countries and counted 185 Fortune 500 companies as customers.

Tech Mahindra and its parent organisation - the Mahindra Group saw the acquisition of
Satyam as a strategic opportunity to move to the next level of growth. The acquisition
allowed the Group to diversify across verticals, customers, and geographies, market a wide
range of services to Satyam's strong customer base. It offers services to clients included in
Fortune 500 Companies. It also occupies a position in Forbes list of Fab 50 Companies in
Asia. In the year 2013, 25th June it merged with another giant corporation to become
Mahindra Satyam.

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1.C) Overview of the Potential and Growth of the Sector

IT Sector has been a driving factor of India‘s growth. The Market Size has increased from
$74 billion in FY 2010-11 to $167 billion in FY 2018-19, bringing in huge forex reserves and
revenues for companies established in India.

1.D) Overview of the Main Players

Major players in the IT Industry are TCS, Infosys, Wipro and HCL Technologies and Tech
Mahindra. Below is the market share of the IT Sector companies.

1.E) Overview of Trends in the Sector

Information technology might be on the cusp of its ―watershed‖ moment. 2019 might mark
the beginning of rapid adoption of new technologies that are disrupting the way businesses
operate. The Internet of Things (IoT) will become intelligent, Self-teaching Artificial

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Intelligence (AI) will be more confident, Augmented Reality is being applied increasingly in
the organisations across a wide spectrum of human activity, Cyber Security and Robotics
Process Automation are other new technologies which are going to impact the IT Industry‘s
revenue in the coming years.

1.F) Companies in Hyderabad

Hyderabad, also known as Cybrabad, is the second leading IT city after Bengaluru in India.
There are hundreds of Companies in the field of IT providing services worldwide. This city
contributes 15% of India‘s Exports.

Hyderabad also named as the global centre of information technology, and the city hub of
global conglomerates branches including Microsoft, Google, IBM, Yahoo, Dell, and
Facebook which providing its services for India and major Indian-based IT Companies
including Tech Mahindra, Infosys, Tata Consultancy Services (TCS), Genpact and Wipro.

1.G) Overview of Employment Opportunities in the Sector for a fresh MBA

Technology has been a buzzing term ever since it took the world by storm. MBA graduates
are put through various challenges during their course of learning. They are not only
encouraged to engage in technical terminologies but also adapt to such techniques.
Information Technology applies to the usage of computers and telecommunications
equipment so that it can store and retrieve data. Information Technology (I.T) sector has been
on a rise due to its latest technology extraction in every aspect. One of the major sections in
the I.T sector is the database management which relates to retrieving large amounts of data
accurately. I.T sector offers a wide range of skills and talent management options to its
employees and MBA graduates. Basic computer skills are provided to the latter during their
course which leads them to a pathway where they can learn newer skills with little training.
In the current B-school teaching methods, the exposure is not limited to the specialization and
electives per se. Extra knowledge is provided through activities like case analysis, field tours
and live presentations. Various MBA graduates with different specialization can enter into an
I.T company.

Job opportunities are immense for an MBA graduate in an I.T sector. MBA (Finance)
graduates generally join the Finance and Accounts division of the company. They take part in
formulating a plan for channelling funds for projects and work on managing complete
operations of the undergoing projects in India and as well as abroad.

With the increased number of employees in the I.T sector, MBA graduates, especially women
have a lot of opportunities to explore in this field. Employee relations are a crucial part of any
organization. An MBA graduate will help in maintaining such relations whose cost is
reflected through the P/L account like the consultants and people providing I.T services.

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2. INDUSTRY AND COMPETITION
2.A) Market Size and Characteristics

Indian IT's core competencies and strengths have placed it on the international canvas,
attracting investments from major countries.
Between April 2000 and December 2012, the computer software and hardware sector
attracted cumulative foreign direct investment (FDI) of Rs 52,377.08 crore (US$ 9.63
billion), according to the Department of Industrial Policy and Promotion (DIPP).
More recently, online retailing, cloud computing and e-commerce are the major driving
forces behind the rapidly increasing growth in the IT industry. Online shopping has increased
with the emergence of internet retailing and e-commerce.
Some of the major initiatives in Indian IT and ITeS sector:
 Tata Consultancy Services (TCS) has set up a new delivery centre in Liverpool,
expanding its operations in the UK. The new facility will provide a secure
applications development and maintenance centre for business applications
 Mumbai International Airport Ltd (MIAL) has entered into a 10 year contract with
Wipro Infotech for the new integrated terminal T2. Under the contract, Wipro will
provide managed services across the entire IT landscape at MIAL
 Mahindra Satyam has acquired 51 per cent stake in Complex IT, a SAP consulting
provider in Brazil. This acquisition will focus on developing solutions for the
enterprise solutions market within Brazil
 Mu Sigma plans to set up a development centre in the US. The company also plans to
recruit another 1,000 personnel by December 2013, adding to its current headcount of
2,300 employees
 Wipro has partnered with New Zealand-based Pingar. With this partnership, Wipro
has gained access to areas such as artificial intelligence and data mining
 HCL Technologies has entered into a multi-million dollar engineering services
agreement with UK-based Cobham. HCL will support multiple Cobham sites across
the globe with a range of services-hardware, software, embedded, mechanical and
testing.

India is the topmost offshoring destination for IT companies across the world. Having proven
its capabilities in delivering both on-shore and off-shore services to global clients, emerging
technologies now offer an entire new gamut of opportunities for top IT firms in India. Export
revenue of the industry is expected to grow 7-9 per cent year-on-year to US$ 135-137 billion
in FY20. The industry is expected to grow to US$ 350 billion by 2025 and BPM is expected
to account for US$ 50-55 billion out of the total revenue.

2.B) Market Trends

Information technology might be on the cusp of its ―watershed‖ moment. 2019 might mark
the beginning of rapid adoption of new technologies that are disrupting the way businesses
operate. IT has got huge scope for not only technical people but across various other domains
as well. The Business Process Outsourcing (BPO) segment accounted for 21.20 per cent of
the total IT exports during FY18. Under Union Budget 2018-19, the government has
announced setting up of a national level programme that will enable efforts in Artificial

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Intelligence (AI) and will help in leveraging AI technology for development works in the
country. Further, the country is providing procedural ease and single window clearance for
setting up facilities. Digitization & Artificial Intelligence are changing the trends in IT.

1. The Internet of Things (IoT) will become intelligent

IoT is advancing and evolving with each passing day. In 2019, a network of collaborative
intelligent things will be created where multiple devices will work together developing IoT to
its full potential. Connected to the global web and combined via wireless communication
channels, things will turn into a one big integrated system driving a major shift in the human-
machine interaction.

As per the Forbes report, the global IoT market will grow from USD 157 Billion in 2016 to
USD 457 Billion by 2020, attaining a Compound Annual Growth Rate (CAGR) of 28.5%.

2. Self-teaching Artificial Intelligence (AI) will be more confident

Since the invention of the first artificial intelligence, the field has witnessed some ground-
breaking innovations. Artificial intelligence has done some revolutionary work in assisting a
human in tasks such as decision making, recognition of objects, emotion & speech, overall
reinventing the customer experience. AI has been able to cope up with these tasks better,
faster, and cheaper than people. The capability of algorithms for self-learning brings us closer
to implementing the AI into many areas of human life.

Based on the forecast by Tractica, a market intelligence firm, the AI market is expected to
grow more than USD 191 Billion by 2024.

3. Augmented Reality

Augmented reality is one step ahead of virtual reality. In augmented reality, systems combine
to give you a real-time 3D vision, sound, haptics (the sense of touch), location data and even
other senses such as smell. All this enable people to immerse themselves in a created physical
world, react to what's around them and alter their virtual environment in real time.
Organizations are increasingly applying this technology across a wide spectrum of human
activity from art & entertainment to commerce and education. 2019 will witness ground-
breaking work in this field to make it readily available to people on their smart devices. As
per the Market Watch Study, Virtual and Augmented Reality market is expected to grow
more than USD 117 Billion by 2022.

4. Cyber Security

In this digital world, where everyone and everything is connected, information flows through
the speed of light. Due to our increased digital footprints, cybersecurity has emerged as the
gravest concern. There will be heavy investment in this field to adapt to new technologies to
enhance security.

As per the Zion Market Research, the global size of the Cyber Security market is expected to
rise to USD 181.77 Billion by 2021.

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5. Robotic Process Automation (RPA)

The ability of RPA to automate tedious and time-consuming tasks has made it the most
sought-after solution. It can automate mundane tasks, assist employees with the use of
supervised automation. As a result, companies can save resource time and ensure the
productivity of the processes. In 2019, RPA would enable small businesses, not just
enterprise business, to leverage the advantages of a digital workforce.

As per the P&S Market Research, New York, the RPA industry‘s market size is expected to
rise to USD 8.6 billion by 2023, growing at a CAGR of 36.2% during 2018-2023.

2.C) Market Structure

The Indian IT and Services is divided into 4 major components –

1) IT Services
2) Business Process Management
3) Software products and engineering services
4) Hardware

Companies like TCS, Infosys, Wipro, Accenture, etc., suffer from the ``burden of the locked-
in customers,'' in the sense that they would like to sell at a high price to their current
customers (because the switching costs are high) but would also like to compete aggressively
in for new customers, since they will remain customers for a long time and contribute to
future profit flows. This leads such firms to price discriminate in favour of new customers,
and such strategies are commonly used.

They‘ve highly proficient and skilled employees. IT industry is known to be one of the
largest job providers in the world, hence have larger number of employees. A huge number of
projects are bagged by IT in India which leads to excellence in operations & technology.
Indian IT is one of the best service providers as it is highly responsive. IT provides 24*7
services, which is advantageous for its western counterparts. Indian IT is comparatively
affordable than its western counterparts. According to Nasscom, the difference in wage is

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around 70%-80%. People who enter IT prefer to stay in IT because of the huge scope that
comes with it.

Expected trend by 2020:

 Export revenue from digital segment forms about 20 per cent of the industry‘s total
export revenue. Total export revenue of the industry is expected to grow 7-9 per cent
year-on-year to US$ 135-137 billion in FY19.

 Delivery models are also being altered, as business is moving to capex (capital
expenditure) based models from opex (operational expenditure) based models, from a
vendor‘s frame of reference.
 In line with this, Indian IT companies are focusing on new models such as platform
based BPO services, creation of Intellectual property, etc.

Domestic market is expected to cross USD50 billion by 2020.

2.D) Characteristic of Competitors

India has established itself as the major offshoring destination for global IT companies. US
$1 trillion opportunity is offered by the emerging technologies, Social, Mobility, Analytics
and Clouds (SMAC) collectively. The global market is on the expansion. Annual current
revenue is expected to be around US $350 billion by FY 2025. There is a bright future in IT
industry for foreseeable future, both in terms of growth in employment and revenue.

However, the paradigm has changed dramatically. The Indian IT industry is facing stiff
competition from the outsourcing companies based in different parts of the world — China,
Taiwan, Philippines, Eastern Europe and Latin America. There are tremendous emphasis on
productivity, value additions, quality, customer experience, and effective communications,
meeting the datelines, domain knowledge and agility.

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 The technologies are moving rapidly from traditional Java, .Net and Mainframe, to Analytics,
Big Data, Artificial Intelligence and Robotics. Today a successful IT professional will be
measured by his ability to adopt new technologies, not the number of years of experience.

Indian companies have started working in these areas and counter the declining market
share from its foreign competitors. The major competitors of Tech Mahindra with their
Employee count, social media reach, revenue and net income are given below.

3. INDUSTRY ANALYSIS
7P’s of Marketing for ITES Industry

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1) Product:
The products offered are mainly software related services. These service offerings in its
marketing mix can be categorized as below:
IT consulting: Information technology, and related software. These also encompass security
with the data, and various IT solutions needed by the company. Most solutions are required
for day to day activities and hence products are customized from company to company.
IT infrastructure: Any requirement of hardware, new technology, gadgets or even
synchronization between machines, are included in IT infrastructure. These advices for
maintaining the infrastructure according to company‘s requirement and affordability are
provided by ITES.
BPO: Business Process Outsourcing. Many a times, companies like to outsource some IT
services, if the training cost of employees are high, or the work is required for limited time.
BPO services are also managed by ITES.
Application development and maintenance: A specific application, software or tool
required by the company is provided by ITES. The tools are designed and customized
according to the requirement.
2) Price:
The Industry has got a dynamic pricing based on the service of solution required by clients.
For similar and common services, that do not require much expertise, it charges a price
depending on the market. This is important, as with growing IT requirements, the competition
in this sector is also growing and clients obviously want to save their money, if task is not
very demanding. Hence competitive pricing marketing mix strategy is an essential element .
For specific tasks, when company has to show more dedication in terms of research and
employee engagement, the pricing strategy adopted is such that it benefits both the client and
the company. As the cost saved by the software, is huge thus, for better services, industry can
charge also a good amount of fees. Hence it charges a customized fee. For offering better
prices to customer, cost saving is done through offshoring the employees, where salaries are
significantly low. Thus, depending on the talent pool of the company, it can offer a lot lesser
price than its competitors.
3) Place:
ITES Industry is global and has a worldwide presence. Sales and marketing offices
look after to acquire new clients, by constantly being in touch with the market trends and
following and assessing the requirement of targeted companies. The clients are managed
through pool of employees who are sitting in different regions of the world, giving a cost
advantage to the firm. India is one great place for hiring new employees by the firm.
Industries maintain a widespread global footprint, across the world. Main clients are based
out of US, UK, India and China.
4) Promotion:
Being in b2b sector, most branding and promotional activities include, developing a positive
trustworthy image amongst the client. For this companies have many initiatives,
communities, CSR activities, positive word of mouth and reference to past deals are some.
Community program is the leading self-promotional program of the companies. It is basically
a customer conference, a modern event for IT sector industries, which is surrounded by the
belief of developing strong bonds with customers. This is done through sharing common

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interests. The annually held summits, which is carried on in different places as UK, US or
India, Singapore, is attended by significant speakers in the field of business and technology.
Even adventure sports are made part of these summits. Positive relations, successful deals
and the revenues the company is trusted with, manages the positive branding of company
through word of mouth. Companies portray themselves as concerned and responsible
organizations, involved in philanthropic works.
5) Physical Evidence:
Being in service industry, the main evidence for ITES is not just the number of products it
sells, but also positive relations with the clients. Both these aspects, of products sold, and
customer satisfaction can be gauged through following tools. Financial income, to sustain its
daily operations, serve its client and manages the employees is significant evidence for IT
firms. Number of new clients coming up, is also an important aspect. For the huge variety
and number of deals trained professional, from all around the world are employed by the
company, manages the international deals, sitting in their own offices. A positive trust and
relation amongst their old clients, give IT firms, a loyal customer base. Not only this, they
also affect the coming deals for them.
6) People:
The huge advantage of IT firms is their ability to employee from offshore, as physical
interaction with client is not very significant, with technologies coming up. This reduces the
cost of hiring, and it also helps the company to recruit from a vast talent pool, rather than a
fixed one.
App developers: These are some initial profiles offered to employees, which is only related
to developing the application according to requirement. The assessment of client‘s
requirement is carried by the team lead.
Tester: The tester profile, is to test the software according to client‘s demand. Various tests
are run, before presenting the final drafts.
Post services: Company‘s vast talent pool, is engaged in offering quality post sale services,
to help the client understand and adjust with the new software and applications.
BPO: Company also offers its employees to work for another client according to their
business demands. Many Indian IT professionals work for different offshore clients in BPO.
7) Process:
The ITES Industry works on a ‗Global delivery Model‘. This means the R&D, and also
employees are managed, offshore. In India also, the clients of Indian employees are offshore
based people, reason mainly being the cheap labour in developing countries, which
significantly reduces the cost of whole deal.
Signage of deals: Employees manage the initial deals with the firms, when either the firm
access them or when they hear requirement of such services by the firm. In later case a tender
is made and when passed by the firm, the initiation is started.
Research: The initial research about the client, and their requirement is also carried on
offshore. The basic reason is that the services offered require very less physical interaction
with the client. The research is done by taking the client in loop
Offerings: After proper research, suggestions are made to clients. One team might be
responsible for the deal as a whole. The tasks are divided, and an initial case is presented to
the clients.
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Implementation: The tech solutions provided are also implemented by the firm. Various
helps in terms of software requirements, initial trainings of employees of clients are done.
Post service: Maintaining a strong client base, also means effective post-deal services. For
any problems, company has dedicated set of employees for the after services for
understanding or glitches or new requirements in the software. Hence this gives an insight in
the marketing mix.

Competitive Rivalry

Intense competitive rivalry exists due to low switching costs. Most of the bigger Indian firms
offer same services and there is little product differentiation

a) Threat of new entrants: Easy entry as the capital required is low. Large players, however,
toughen prospects of small and medium players to win large deals.

b) Substitute Products: Threat is medium as new centres, such as Philippines and China, are
fast gaining ground among investors due to their low-cost advantages.

c) Bargaining power of suppliers: Bargaining power of suppliers is less as most of their

businesses come from the same geographies.

d) Bargaining power of customers: Bargaining power is high as many IT firms fight for a
similar project. Firms are mostly dependent on same geography, which increases customer
power

Government Initiatives

As a part of the National Electronics Policy, the Government of India is planning to set-up 15
new laboratories under public-private-partnership (PPP) model for hardware and software
testing. The labs, for which the locations are yet to be decided, will facilitate registration and
testing of IT products before they are launched in the market.
Meanwhile, in order to boost investments in Indian Special Economic Zones (SEZs), the
Government is likely to announce incentives for the IT-oriented export hubs. Among all the
SEZs across various sectors, the IT-related ones contribute the most to the exports. Thus, the
Ministry of Commerce plans to streamline the incentives to encourage such zones to establish
their set-ups in tier-II and tier-III cities. The incentives would majorly aim at simplifying
standards for setting up SEZs and not have any direct revenue implications.
FDI up to 100 per cent under the automatic route is allowed in Data processing, software
development and computer consultancy services; Software supply services; Business and
management consultancy services, Market Research Services, Technical testing & Analysis
services.
Some of the major initiatives taken by the Government to promote IT and ITeS sector in
India are:
 The Government of West Bengal plans to spend Rs 41 crore (US$ 7.54 million) to roll
out citizen-centric services electronically across 19 districts including Kolkata

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  Kerala has set an ambitious target of becoming a cent per cent digital state in
governance, said Mr P K Kunhalikutty, Minister for Industries and Information
Technology, Government of Kerala. The State has around 600 small, medium and
large IT firms employing over 80,000 professionals directly and nearly three times the
number indirectly
 The Cabinet has recently approved the National Policy on Information Technology
2012. The policy aims to increase revenues of IT and ITES industry from US$ 100
billion to US$ 300 billion by 2020 and expand exports from US$ 69 billion to US$
200 billion by 2020
 The Government of India plans to set up 15 new laboratories for testing hardware and
software products under public-private partnership (PPP) model
 The Ministry of Finance has issued a circular to chairmen of public sector banks and
regional rural banks, that all payments to customers, staff, vendors and suppliers as
well as disbursement of loans and payments towards investments should be made only
through the electronic mode

Tech Mahindra is one of the first India based consulting company to have an exclusive
Logistics practice with in-depth experience that covers the entire Logistics Service Provider
(LSP) business cycle. . Their logistics practice offers end-to-end solutions for LSPs. The key
value propositions for the Logistics industry are:

 Experience on different lines of business in LSP industry, as well as extensive experience

in shippers logistics enables us create LSP value proposition to shippers
 Solutions and services that drive business growth
 Domain and industry focused Business Analyst group
 Experience on tools and applications used in the Logistics industry. We are the leaders in
Oracle Transport Management (OTM) for LSPs
 Ability to bring a combination of Industry, Processes & Technology to provide a holistic
solution

They have partnered with leading LSPs with operations in integrated services, lead logistics,
third-party logistics, freight forwarding, trucking, Less Than Truckload (LTL) operations and
railroads to provide core industry solutions.

About 80% of supply chain jobs are related to a service, instead of fabricating a physical
product. This includes roles such as operations managers, computer programmers, and truck
drivers, among others. Tech Mahindra‘s rich lineage and expertise have made them a strong,
reliable player within Cloud solution providers. They enable enterprises, telecom companies
and ISVs around the world to adopt Cloud-based IT capabilities, help optimize costs, enhance
time-to-market, and bring in the much desired flexibility in IT operations.

Apart from its acquisition of HCI, the company does not appear to be planning to
significantly increase its onshore presence in the U.S. to reduce its (relatively high)
dependence on H-1B visas and also improve client proximity for (early stage) digital projects.
Its strategy appears to continue to focus on the kind of activity that can be offshored.

Improving the logistics and supply chain is a huge task as this leads to reduction in the cost
incurred.

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Path Breaking Technological Advancement

New Age Delivery‘ for software of the future.

As well as the vertical stories, we also got a brief introduction to this initiative to transform
how software development is done, essentially to increase the speed (and quality) of code
production. Tech Mahindra‘s ‗New Age Delivery‘ platform (it might be branded differently,
but for this blog I‘ll refer to it as NAD) combines various approaches and tools the company
has been developing in the last few years. Key attributes and related assets (both proprietary
IP and third-party) include:

 Automation and AI across the SDLC, leveraging its AQT (Automation, Quality, Time)
suite of automation and AI tools, including TACTIx (IT and network ops), FixStream
Meridian (IT ops) LitmusT (testing), Entelio (chatbots) and UNO (RPA), and Acumos,
an open source platform for building and sharing AI applications.
 Enabling the adoption of Agile and DevOps at scale, leveraging the ADOPT framework
that it launched back in 2014, based on the CollabNet TeamForge ALM platform.
Includes an Agile training-kit.
 Reusability, leveraging its ‗Blue Marble‘ cloud-based business service integration
platform for micro-services.
 Collaboration, using the Xtra Mile crowdsourcing platform.
 Up-skilling/reskilling capabilities including through gamification.
Co-creation with clients.

Some of these assets have been used by Tech Mahindra for some years; others such as
Acumos, launched a few months ago, are much newer.
Acumos, co-developed with AT&T and hosted by The Linux Foundation, is a marketplace
where users can access AI and ML models packaged into micro-services and connect them to
data sources to build new AI applications.

Tech Mahindra‘s NAD platform also includes ‗Design Thinking as a Service‘ (DTaS),
'Capability as a Service' (CaaS) and 'Upskilling as a Service‘ (UaaS) which includes online
training (takes in a developer‘s rankings from the crowdsourcing platform).
 The platform is helping Tech Mahindra position as a services aggregator, managing
projects in which onboarded ‗capability partners‘ can bid for pockets of work (code
packages) in projects. The next stage of the initiative appears to be onboarding partners
with the requisite skillsets (e.g. mobile) into the platform.
 As well as extending Tech Mahindra‘s reach in areas where there are skills shortages, the
UaaS elements are of critical importance in re- and up-skilling its internal talent for newer
technologies and methods of working (it includes a predictive tool for identifying
appropriate candidates).
 The NAD platform thus aims to address a number of critical success factors in software
delivery today. It is clearly particularly useful for complex digital transformation projects.
Presumably, Tech Mahindra can also extend its use to managed services engagements.
 Tech Mahindra is currently using the platform with four clients in the telecoms and retail
sectors.

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 Although America and Europe are the major market for Tech Mahindra from where it earns
3/4th of its revenue, it has diversified its portfolio location wise and it has started betting big
on India and other emerging markets.

FY 2015 FY 2016 FY 2017 FY 2018

Recent Tech Mahindra news which shows how committed is the company to diversify in order to
reduce its dependency on US and Europe and increase the presence in other areas:

 The deals include a Rs 270 crore contract from Coal IndiaNSE for enterprise technology
modernisation, which will provide real-time information between the company and its
subsidiaries and aid quick decision-making.

 Tech Mahindra will also build and maintain an Enterprise Business System (EBS) to
modernise and automate port processes for five central government-owned ports for Rs 350
crore including taxes in a first such outsourcing deal in the major ports.

 In collaboration with the state government of Andhra Pradesh, Tech Mahindra is going to
establish country's first Cyber Security Operations Centre (APCSOC) in the city of
Vijayawada. The state-of-the-art Cyber Security Operations Centre inaugurated today is
equipped with traditional SOC and predictive threat analytics capabilities. The security
coverage extends to all central and state government entities.

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 It has partnered with Blockchain Technology Pioneer ChromaWay to Bring Consortium
Databases to the Indian Market.

 Tech Mahindra expects to launch about five pilot projects on 5G services by next month and
execute big projects on the new generation network from next financial year onwards.

 They had set up an innovation lab powered by Intel architecture to accelerate 5G roll out in
India.

Compared to its competitors, Tech Mahindra has increased its presence in India drastically
and is going to expand to new market by adding a number of clients further. With new
projects in line and getting into agreement with the administration, it has displayed its huge
interest in increasing its revenue from the local market.

IT Spending Growth Rates are to be affected

Rising interest rates, the absence of a major tax break in the U.S. after the 2017 overhaul and
slowing growth in Asia will likely curtail 2019 information-technology spending growth.
Brexit may also dent expansion, as companies look to cut costs. Still, the shift to the cloud
should be strong and remain the primary growth driver for tech.

CyberSecurity Demand Stays Steady however IoT Spending Is going to Rise

Rising cyberattacks across the globe should continue to fuel steady growth in security
software products. This should remain one functional area in software that's unlikely to see a
slowdown, as companies beef up defences against new malware and ransomware attacks. In
security, growth of privacy-related and access-management products should pick up, driven
by an increased need for a tighter data control. Internet-of-Things (IoT) technology adoption
by companies should also climb as new products from the biggest cloud providers gain
momentum.

Total Cloud Spending Forecast

Demand for cloud services and e-commerce software should remain strong, as these
structural shifts are still nascent. As well as growth in public cloud, or computing services
offered by a third party, we expect more hybrid-cloud deployments. Here, enterprises choose
the public cloud for some IT needs and may opt to keep the rest in-house. Non-cloud-borne
companies still have most of their IT infrastructure in-house. Digital-commerce software is
another area that will see strength on greater demand for purchasing goods and products via
various digital channels, such as mobile, online and social media.

Value Chain Analysis

3-4-3 Approach Informing Vertical Initiatives

For each target vertical, the company has picked 3 major trends, which have informed the
selection of 4 focus areas in portfolio development (the ‗big bets‘), and also the sector
positioning in helping clients address 3 core CEO objectives: 'Run Better, Change Faster,
Grow Greater'.

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To briefly illustrate the application of the ‗3-4-3‘ approach to two sectors: Communications,
its largest and most mature (while Tech Mahindra‘s dependence on this sector group has been
reducing, it still represents nearly 41.5% of revenues) and BFSI, one of its smallest vertical
units (13% of revenues).

Communications industry

BFSI sectors

Articulating what 3-4-3 means at sector level appears to be a work-in-progress (the links
across the 3 dimensions are not always clear), but it is a neat approach for clarifying
investment priorities and for developing a narrative around business outcomes for each target
vertical: ‗Run, Change, and Grow‘ workshops are likely to have been an important
instrument in the very evident recent improvement in client mining.
Articulating what 3-4-3 means at sector level appears to be a work-in-progress (the links
across the 3 dimensions are not always clear), but it is a neat approach for clarifying
investment priorities and for developing a narrative around business outcomes for each target
vertical: ‗Run, Change, and Grow‘ workshops are likely to have been an important
instrument in the very evident recent improvement in client mining.

Strategic Partnerships

Through a powerful alliance ecosystem of leading technology firms and disruptive startups, we
develop our business capabilities to deliver a complete and customized solution to our
customers. Our dedicated Alliance teams and partner management help our customers in their

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journey of digital transformation and be relevant in the market

Business alliance is an important lever to gain and sustain a competitive edge over the
competitors.

SAP: SAP as a strategic partner has been Tech Mahindra‘s lever for success in key markets
for a decade now. Tech Mahindra has partnered with SAP on a global level .Therefore, today,
it helps enterprises achieve their business objectives and sustain competitive advantage. They
are a VAR (Value Added Reseller) partner for US, ANZ, Singapore, Vietnam, India ,Japan,
Philippines and Malaysia regions and also Services partner across US, UK, India, Africa,
China and sub Saharan African region (20+ countries).

CA Technologies: Company‘s alliance shares a high level engagement with a very strong
Go-to-Market (GTM) . Tech Mahindra and CA have together worked extensively in the USA
and Australia and have jointly built a CA Service Assurance Lab at our facility in Hinjewadi.
They also use CA tools in our Application Performance Monitoring Lab and CA products
such as Spectrum in Cloud Lab.

Comptel: Tech Mahindra and Comptel entered into a strategic partnership in February 2014
with mutually beneficial business objectives. Tech Mahindra proactively positions and
primes Comptel Fulfillment Solutions (FlowOne) into communications providers globally. In
these cases, Tech Mahindra owns product recommendation, performs solution architecture
and system integration. Likewise, Comptel promotes Tech Mahindra as their preferred
systems integrator.

As a part of the strategic partnership, Tech Mahindra invests in a Comptel Lab for Fulfillment
solutions, aided by Comptel. The lab was inaugurated on June 24, 2014 and is equipped with
latest version of Comptel FlowOne Fulfillment. Also, a central pool of Comptel resources has
been created to work on deliveries where a Comptel Solution is being proposed.

Amazon Web Services: Tech Mahindra is Advanced Consulting Partner and Channel
reseller of Amazon Web Services. In short time of 3 years, Tech Mahindra and AWS have
developed a strong strategic relationship. The partnership has helped customers do business
better by providing cloud solution expertise.

Salesforce.com: Tech Mahindra made early investments in SaaS-based CRM solutions and
is among the first SIs to establish a dedicated competency on Salesforce.com. A strong
partnership spanning over nine years has enabled them to successfully execute more than 100
full lifecycle engagements across Sales, Service, and Marketing functions. We are a GOLD
Partner, with 600+ dedicated consultants in the team, over 400+ of them certified.

4. FINDINGS

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Financial Analysis (Margin): Although there has been little or no increase in the
revenue in dollar terms in recent quarter, the rupee depreciation has impacted the overall
revenue of the firm. It is going to increase by 14.2% in the current year and will increase by
10.6% in the next financial year. This is basically on back of expansion policies of the
company.

Marketing Analysis (Telecom Segment): Since Telecommunications is the highest

revenue generating market segment for Tech Mahindra, it has an upper-hand over its
competitors. The biggest impact that the company is going to see is the rollout of 5G
spectrum in most of the countries. It has signed a Memorandum of Understanding with
Japanese electric company RAKUTEN for building next-generation (4G and 5G) software-
defined network laboratories in Bengaluru and Tokyo. This collaboration with RAKUTEN
will help further drive innovation in the 5G space and enhance customer experience and lead
the transformation in mobile network technology

Operational Analysis (Acquisitions and New Age Delivery System) :

Compared to its competitors, Tech Mahindra has increased its presence in India drastically
and is going to expand to new market by adding a number of clients further. With new
projects in line and getting into agreement with the administration, it has displayed its huge
interest in increasing its revenue from the local market. Moreover, The NAD initiative will be
a key asset in evolving its delivery capability to help it achieve its target of having 50% of
revenue from digital services by 2020.

HR Analysis (Hiring and Attrition Rate): While attrition rate at Infosys, Cognizant
both saw a rate crossing 20%. While Wipro experienced an attrition rate of 17 percent and
TCS saw the lowest attrition of 10.9 percent, Tech Mahindra‘s attrition rate hovered around
15.5%. Signalling a shift in hiring process, there were high numbers of layoffs in order to
increase utilisation as per the projects available and bring it above the industry average of
84%.

Capacity Analysis (Utilisation level): The spurt in acquisitions has shown the urge of
company‘s increase in target for revenue growth. While digital acquisitions are the trend in
the market due to higher margins, many Indian IT firms still lag behind in this. Tech
Mahindra has started adding capacity in other verticals and some of its best bets are Target
Group from UK and Pininfarina. These companies have opened up access to some 450
customers, leading to increase in sales realisations. The biggest competitor TCS has also
frayed in the digital design and acquired London based W12 Studios.

Logistics and Supply Chain Analysis:

TechMNxt as a Positioning Statement and Eco-System Program

‗TechMNxt‘ is a term being used by Tech Mahindra as a positioning statement, as it works
on becoming a ‗next gen‘ IT services company in terms of technologies, business model, and
employee capabilities. The company is also using TechMNxt to refer to a global program to
engage with tech start-ups, alliance partners and academia to develop offerings in the areas of
AI, ML, Cyber-security, next-gen networks, big data, IoTs, etc., and also to open CoEs. A

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recent example of an initiative under this banner is opening a Maker‘s Lab in a BT Research
Campus in the U.K. Expect to see the brand being used increasingly.

Forecast: Even as Nasscom scrapped its annual forecast, the industry is going to just miss
the 2020 forecast of $200-$225 billion in revenue as new business models have taken time to
grow and automation took a bite out growth.

The trends that defined this year’s Revenue are:

India‘s IT & ITeS industry grew to US$ 181 billion in 2018-19. Exports from the industry
increased to US$ 137 billion in FY19 while domestic revenues (including hardware)
advanced to US$ 44 billion. Spending on Information Technology in India is expected to
grow over 9 per cent to reach US$ 87.1 billion in 2018. Revenue from digital segment is
expected to comprise 38 per cent of the forecasted US$ 350 billion industry revenue by 2025.

Reskilling will become the norm: Even in ancient times warriors would routinely undergo
reskilling exercises to remain relevant, says Sudeep Sen, AVP, TeamLease Services.

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Constantly upgrading oneself will no longer be optional but a core requirement. Also, the
onus will be on the employee to upgrade, not on the employer. It won‘t be unusual for a 45-
year-old employee to take a study break to keep up with the latest tech developments. Those
who don‘t will fall by the wayside.

The Automation Premium: AI based bots will make humans redundant, especially in low
skill roles. But the red carpet will be rolled out to hold on to the higher skilled ones.

Tweak in H1B Visa Rule

The biggest challenge that the Indian IT Industry faced was the review of H1B Visa
Programme, which allows companies to temporarily employ foreign workers in America in
speciality occupations. As per reports, if the proposed changes in H1B Visa Norms are done,
there is going to be a setback for the Indian IT Firms.

1) The new proposals, if implemented, will work against the Indian IT services sector (H-1B
dependent employers) as their share of master‘s degree or equivalent for H-1B visas
approved was 27% compared to 55% for non-H-1B dependent employers, says Icra. An
entity is defined as H-1B dependent if more than 15% of its employees are on an H-1B visa.

2) The new proposals will result in about 10% reduction in H1-B visa approvals for regular
applicants (applicants without advance degrees - master‘s or higher from US institutions),
who form the major part of the H1-B visa requirements of Indian IT services companies (H-
1B dependent employers)

3) This could lead to higher onsite hiring, which is associated with higher wage bills and
lower margins.

4) With the visa issuance norms being tightened by restricting access of entry-level
programmers coupled with increasing compliance requirements adding to cost pressures, Icra
says, Indian companies have started to ramp up onshore hiring. But increased onshore hiring
associated with a higher wage bill along with factors such as pricing pressure on
commoditised services and wage inflation will negatively impact their margins going
forward.

9.0 Summary

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Indian IT industry needs to reinvent itself and to be capable of innovation, and this ambition
is very clear at Tech Mahindra. The company‘s heritage and domain expertise in
Communications and its strong capabilities in engineering services will continue to be an
important facet of its specialization. Until 2012, Pune-headquartered Tech Mahindra counted
British Telecom as a major stakeholder. Soon after BT‘s exit in December 2012, the IT firm
made a successful bid for much-maligned Satyam Computers; both entities eventually
merged in 2014, making Tech Mahindra India‘s fifth largest software services firm. In the
last 18 months or so, Tech Mahindra — like all other ―big boys‖ of IT — has gradually
moved away from traditional software services to what is now being touted as ―emerging
tech‖.

Unlike some Indian-oriented service providers, Tech Mahindra remains very proud of its
Indian culture and centricity. Most of the client examples provided over the two days were
Indian organizations (though 47% of its revenues are from U.S. headquartered organizations),
which gave a slightly local feel to this global analyst event.

While Tech Mahindra is convincing in how it is developing its offerings for the
Communications and selected discrete manufacturing sectors, there is more work to be done
in developing a coherent narrative about its ability in some of its other target sectors to
support companies in major digital transformation initiatives. The fact that it still refers to its
non-Communications units as its ‗Enterprise‘ business is telling. Although BIO Agency and
Pininfarina (both acquired in 2016) got star billing, there was no mention at all of HCI, its
large recent acquisition in the U.S. healthcare sector.

All tier-1 IT services providers are busily accelerating their use of automation and AI in
service delivery, with the focus still primarily in infrastructure operations. Tech Mahindra‘s
approach with its NAD platform (which focuses on software development) has a broader
vision, one that includes harnessing crowdsourcing in a systematic manner, bringing in
specialist partners, UaaS, and the Acumos marketplace, all of which are likely to be very
attractive to clients.

Tech Mahindra has been applying AI in its engineering services business exceptionally well.
The NAD platform is also a well thought-through stitching together of a number of
approaches to software development. The NAD initiative will be a key asset in evolving its
delivery capability to help it achieve its target of having 50% of revenue from digital services
by 2020. The new market trends like Blockchain, Machine Learning, Artificial Intelligence,
IoT, Robotics, Cyber security, and so on are going to define the future course of action for the
IT firms globally. It depends how the companies are realising the need to adapt to the
changes and how rapidly they shift their focus on these.

Bibliography:

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https://www.ibef.org/download/IT-and-ITeS-August-2014.pdf

https://www.mbaskool.com/brandguide/it-technology/350-infosys.html

https://www.cognizant.com/industries

https://economictimes.indiatimes.com/tech-mahindra-ltd/yearly/companyid-11221.cms

https://www.marketscreener.com/TECH-MAHINDRA-33647041/financials/

https://studylib.net/doc/8114205/swot-analysis-on-indian-it-and-ites-sector

https://craft.co/tech-mahindra

https://www.sanasecurities.com/tech-mahindra-equity-research/

https://www.techmahindra.com/sites/resourceCenter/Financial%20Reports/Annual-Report-
FY17-18.pdf

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