The latest financial discourse surrounding the IT sector turns the spotlight on Tech Mahindra (Tech M), which has disclosed a significant dip in its fiscal metrics. The multinational technology company registered a steep decline in profits for the fourth quarter, with a 40.9% year-on-year fall to ₹661 crore. This announcement was accompanied by a subdued tone reflective of broader industry tribulations.
Beyond just profits, Tech Mahindra’s consolidated revenue for Q4 also declined by 6.2% year-over-year to ₹12,871 crore. This fall can be ascribed to the perceptible slowdown that is beleaguering various sectors, notably including the communications and telecom fields, as well as the media and entertainment industries. The sentiment expressed by the company is one of a cautious awareness of limited visibility and the challenges spanning across its operational verticals.
Mohit Joshi, who commands a pivotal role as both the Chief Executive Officer and Managing Director of Tech Mahindra, vocalized the hurdles faced by the company as being in alignment with global industry patterns. Despite a year noted for arduous tests for IT services on the whole, Joshi highlighted the enduring movement towards digitalization. At a media conference held last Thursday, he commented on the company’s outlook, “FY24 posed its fair share of challenges for IT services in general, yet, amidst the global economic uncertainties, we continue to observe a notable push towards digital adoption. As we step into FY25, we look forward to improvement in clients’ spending, which fuels our optimism for a better revenue performance ahead.”
Joshi is banking on the subsequent fiscal term to yield more favorable outcomes, his optimism underpinned by the recognition and actions of global enterprises who are increasingly attuned to the imperative need to “address, adapt, and defend” in the prevailing economic climate. Signs of growth are already ostensibly sprouting, with the onset of Q1 showing promising indications.
Rohit Anand, occupying the role of Chief Financial Officer at Tech Mahindra, conveyed confidence in the company’s strategic directions, which are intended to lead to a stable ascent in earnings over time. Anand stressed the continued commitment to operational excellence and cost-effectiveness as pivotal to enabling better returns for shareholders.
Yet, the full year’s performance painted a gloomier fiscal picture. Tech Mahindra’s full fiscal (FY24) revenue tracked a descent by 2.4% year-over-year to ₹51,996 crore. A more pronounced blow was observed in the net profit, which more than halved compared to the prior year, settling at ₹2,358 crore. Amid these figures, the net new-deal bookings stood at a value of $500 million, contrasting with $382 million the preceding quarter and $592 million in the year-ago period.
The workforce dynamics at Tech Mahindra have also witnessed fluctuations, with the company reporting a contraction in headcount by 795 during Q4. However, balancing this reduction, it has onboarded 6,000 fresh graduates over the fiscal year. The present employee strength is recorded at 1,45,455 as of March 31.
As this financial chapter closes for Tech Mahindra, and indeed the IT industry at large, the challenges of a global slowdown loom large. Nevertheless, the company is not shying away from the reality of the situation; rather, it ranks high on determinations to turn the tide in the following fiscal year. Prospects for rejuvenation are pinned on digital adaptation and strategic foresight, cornerstones on which Tech Mahindra hopes to build a more resilient and profitable future.
