Tech Mahindra to invest Rs 700 cr in products and platforms division in two years

IT services company Tech Mahindra on Friday said it will invest up to Rs 700 crore in the newly carved out division of products and platforms in the next two years.

The Mahindra group company is already present in the products and platforms business with its acquisition of the telecom sector-focused Comviva and other offerings which are delivering an annual revenue run rate of USD 450 million, the company's chief executive and managing director C P Gurnani said.

"In the next two-three years, we are aiming to take the revenue from products and platforms to USD 1 billion," he told PTI in a virtual interaction in Pune after making the announcement about the new division at 'investor day'.

The investment in the new division, to be led by Gurugram-headquartered Comviva's team, will be Rs 500-700 crore over the next two-and-half years, Gurnani said.

The Comviva team, which also has a presence in Bhubaneswar and Bengaluru, has been tasked with leading the entire products and platforms play,he said.

Apart from telecom, Tech M's products and platforms also extends to the banking, financial services and insurance vertical and other sectors in the enterprise business at present, he said, adding that Comviva's standalone contribution to the USD 450 million pie will be about USD 200 million.

Company's president for corporate development Vivek Agarwal said the company will be leveraging on existing customers who will form the first of the clients for the products and platforms offerings, and also the embedded domain knowledge it has earned by working for customers.

He also said the products and platforms play will help expand the margins for the company, which has been aspiring to improve on profitability for some time now. Gurnani said the investments are not very significant and will be made using its existing balance sheet strength, and added that the investments will be in technology, which will involve research and development tools and creation of labs.

It will be getting people internally, and also hiring specialized talent with domain expertise from outside for the new division, he added.

The new division will also be working with other companies in the diversified Mahindra group, which can yield sector-specific solutions, Gurnani said.

Apart from the new products and platforms division, Gurnani also said the company is aiming to increase the overall revenue contribution from partnerships to the industry average of 40 per cent in a year's time from the present 30 per cent.

It has created a road map for the same in coordination with its technology partners SAP, Amazon, Google and Microsoft, Gurnani said.

Tech Mahindra will also focus on co-creation with customers, he said, pointing out that it has agreed to create solutions with a Japanese customer which can help the broader auto industry worldwide as well.

It will also be working with other companies in the group on this aspect of co-creation, he added.

Speaking to investors earlier in the day, its chief financial officer Rohit Anand said the company will be focusing on organic growth, margin expansion and driving portfolio synergies in the future.

Its business head for Business Process Services Birendra Sen said generative artificial intelligence platforms like ChatGPT will not have a major impact on the business.

Tech Mahindra scrip settled at Rs 1,085.45, down 2.19 per cent on BSE on Friday.

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