Tech Mahindra CEO Unveils Plan for Transparent AI Deal Pricing

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AuthorVihaan Mehta|Published at:
Tech Mahindra CEO Unveils Plan for Transparent AI Deal Pricing
Overview

Tech Mahindra CEO Mohit Joshi announced the company will introduce a new metric to transparently price artificial intelligence in client deals within the next quarter. Speaking from Davos, Joshi criticized current AI revenue reporting as marketing-driven and unveiled Tech Mahindra's plan for clearer deal economics. The IT major also reported strong Q3 results, exceeding revenue growth and margin expansion targets, and reaffirmed its 15% full-year margin goal.

AI Deal Economics Transparency Initiative

Tech Mahindra is preparing to launch a distinct metric to precisely quantify how artificial intelligence is factored into client contracts. This move addresses a growing concern that current reporting of AI-linked revenue often serves more as a marketing tactic than a genuine reflection of value. Mohit Joshi, Managing Director and CEO, stated that the company is developing a framework to offer investors and clients a clearer view of AI's impact on deal economics.

Strong Quarterly Performance and Outlook

Joshi highlighted a robust December quarter for Tech Mahindra, marked by 1.7% sequential revenue growth. The company also saw a significant increase in large deal wins and achieved its ninth consecutive quarter of margin expansion. The turnaround plan initiated in 2024 is reportedly on track, supported by the company's leadership team.

Tech Mahindra remains committed to its full-year average margin target of 15%. Joshi indicated that the company possesses sufficient strategies to safeguard profitability while simultaneously accelerating growth. Projections suggest Tech Mahindra is poised to exceed the peer-average growth range of 3-5%, demonstrating a strong recovery from its position at the bottom of the growth curve in fiscal year 2023.

Market Focus and AI as a Tailwind

Europe represents a significant market for Tech Mahindra, with exposure to the automotive sector providing a global reach. However, the telecommunications sector continues to be the company's largest business segment, primarily driven by domestic demand.

Joshi views artificial intelligence as a clear tailwind for the IT services industry, countering earlier apprehensions about it being a headwind. He noted an increased demand for experienced talent, even with AI adoption. India stands out as the largest global hub for trained AI personnel. AI offers substantial opportunities in transforming network infrastructure, customer engagement, and the business-to-business landscape. Tech Mahindra plans to capitalize on these opportunities by developing proprietary language models and collaborating with hyperscalers and AI vendors. The company's robust deal pipeline further bolsters confidence in sustained future growth.

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