IT services firm Tech Mahindra hopes to strike large deals with clients in the banking, financial services and insurance (BFSI) sector even though companies are cutting down on technology spends, a top company executive said.
The BFSI vertical contributes over a third of revenue for the software industry. For Tech Mahindra, communications is the biggest vertical.
“The banking, insurance and communications verticals are two key sectors where some large deals are possible in terms of scale. This would change with geography,” Jagdish Mitra, chief strategy officer at Tech Mahindra, told ET.
The banking sector in the US and Europe is the biggest spender on technology, often ahead of other segments of the economy. The confidence of the banking sector al- so reflects in other sectors, an indication for Indian IT services companies to build their strategy.
Generally, while the company is getting more deals, on an average, the deal sizes have come down due to shifts in technology spending, Mitra said.
“Overall, deal sizes have gone down while numbers are increasing, but that is because the nature of the business is changing. You cannot have a three-year deal in infrastructure management because with the impact of artificial intelligence and cloud, you will need another transformation in three years’ time,” he said.
The communications vertical of Tech Mahindra contributes over 40% to its total revenues. With 5G rollouts expected to pick up steam in 2020, it is likely to contribute to the overall number of large deals for the organisation.
Most analysts have cautioned that a slowdown in BFSI spend would have a direct impact on the performance of tech firms. As a result, most firms are looking at new avenues of growth, either through acquisitions or identifying new areas to focus on.
Mitra, who is also head of growth at the company following a leadership reorganisation earlier this year, said sports was one of the key verticals they would be focusing on. “Sports and media & entertainment are coming together, and we are seeing a lot of traction in this space,” said Mitra. While the company doesn’t share revenue figures by vertical, he said this business was growing faster than the overall business at close to 25%.
Tech Mahindra has adopted a two-pronged growth strategy—identify new verticals or go deeper in existing ones where it has a smaller presence, and enter new geographies or strengthen its presence in existing ones. The focus on sports is a part of this push. Mitra said the company was looking at North America, India, Australia, the UK, West Asia as well as countries like Germany for opportunities in local sports. Tech Mahindra is the first Indian firm to work with an American football team where data plays a crucial role in various aspects of the game, including player performance.
Source: Economic Times