Tech Mahindra Hints Rise In Margins In Remaining Quarters This Fiscal Year

While attempting to continue defying the industry trend of increased attrition, Tech Mahindra anticipates margins to increase for the remaining three-quarters of this fiscal. As we look ahead to the upcoming quarters, and assuming the macro remains where it is, we should be able to generate margin expansion every quarter. "We feel the first quarter is the bottom for us from a margin standpoint. In the second, third, and fourth quarters of this year, we will increase margins, Tech Mahindra Chief Financial Officer (CFO) Rohit Anand stated.

The Mahindra & Mahindra group firm reported an operating margin of 11 percent for the first quarter ended in June, down from 13.2 percent in the consecutive fourth quarter and 15.2 percent in the prior-year period. Large agreements now average between $800 million and $1 billion, up from $400 million per quarter previously. When it comes to many huge projects, profitability begins to rise after 18 to 24 months, after which the first 12 to 18 months are often weaker.

As time goes on, it will become a regular run rate, and investments made in significant acquisitions should pay off for us in the second half. As a result, that's another area where our investment in big deals should be neutralized, according to Anand. The fifth-largest corporation in the country by revenue had made some investments, but its utilization rates fell from 87–88 percent in the same period last year to roughly 82–83 percent this year. "This is a result of our hiring of new employees, who we invested in and trained. As we proceed, we'll make sure that utilization increases, which ought to improve our profits. Along with these initiatives, we are also working on pricing rises, maximizing operational effectiveness, automation, and outsourcing, according to Anand.

In the third quarter, Tech Mahindra's attrition rate decreased from 24 percent in the fourth quarter of the previous fiscal year to 22 percent over the preceding twelve months. This occurs at a time when the IT sector is struggling to find qualified workers, with almost all businesses reporting an increase in the number of employees quitting their jobs. In FY22, Tech Mahindra hired roughly 10,000 new employees, and it plans to increase that number in FY23. In the first quarter, the company hired 6,862 additional workers, bringing its overall employment to 158,035.