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information technology | IST

Rising hiring costs a worry for IT sector; clients accelerating spending: Tech Mahindra

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In an interview with CNBC-TV18, Milind Kulkarni, CFO at Tech Mahindra, said that all the users are accelerating their spending on IT. He also mentioned that rising hiring costs continue to be an ongoing concern for the IT industry.

Milind Kulkarni, CFO at Tech Mahindra, said that users are willing to spend more and are accelerating their spending on IT. Kulkarni believes that BFSI and hi-tech are both becoming growth driving verticals for the company. However, he mentioned that as far as hiring costs are concerned, they continue to rise and remain an industry-wide worry.
In an interview with CNBC-TV18, Kulkarni said, “The mood is quite buoyant at this point. There is potential in hi-tech and BFSI, we expect maximum momentum from these verticals. Manufacturing after not a great year last year has also started growing. Communication is doing well, so almost all verticals are growing for us.”
On hiring and costs related to hiring, he said, “On supply side, all the IT companies have constrained so we had a large number for last quarter. I mean our highest hiring in many, many quarters. This quarter also, we expect our hiring should be a reasonably decent number, costs continue to go up and that is an area of worry for us and I believe, for most players in the industry as well.”
5G revenues for Tech Mahindra was $500 million at the end of the second quarter. Kulkarni said, “We expect that rate to accelerate, the growth rate in 5G to accelerate and because our DNA is communication, we believe that we are well placed to capitalise on that opportunity.”
“40 percent of our revenue comes from the communication vertical, and we are specialised in this vertical. We have a few acquisitions that we did many years back in terms of networking that is going to help us,” he said.
On revenues from hi-tech and BFSI, he said, “Hi-tech could hit $1 billion and BFSI can hit $2 billion in revenues. So, the timeline for this could be two to three years; it is not going to be FY23.”
On acquisitions, Kulkarni said, “We would continue to look at the acquisition opportunities, certainly, and it will be in the area of cloud, digital and areas where we think there is a white space and we need to improve our capabilities. So the acquisition would continue to be our part of our strategy as in the past.”
“We would certainly look at opportunities in cloud, digital, and then maybe if possible acquisition in the BFSI space where we are not as strong as we would like to be,” he said.
On cash on books, Kulkarni said, “In terms of cash, as of September-end, we had about 1.4 billion cash and cash equivalents. We paid out dividend so that would have taken away some cash, but we have enough cash for acquisition and our cash flows currently are also quite good. Maybe similar to first half’s like 185 million on an average, per quarter. So, cash eligibility for acquisition, for dividend is not really an issue. But we don't have a target for acquisition.”
For full management commentary, watch the video.