EXCLUSIVE: Tech Mahindra CFO says talent is getting expensive but clients are willing to pay the premium

• The demand-supply gap between fresh talent and the skill demands of the IT services industry is only going to increase in the coming days.
• Tech Mahindra points out that while skills are high in demand, clients are willing to pay a premium because the pace of change is so fast.
• For now, talent availability is trumping the ‘rate discussion’ as clients look to speed up their digital transformation.

Reskilling employees in the IT services sector is not a new phenomenon. However, since COVID-19 pushed so many businesses to expedite their digital journey, the demand for these skills is higher than ever.

“I see some of the skills which are high in demand, but clients are willing to pay a premium because of the pace of change. What is impacting us, is also impacting our clients,” Vivek Agarwal, the head of corporate development and global head for healthcare and financial Services at Tech Mahindra told Business Insider in an exclusive interaction.

A study by NASSCOM estimates that India’s demand for digital talents is around eight times larger than the size of its fresh talent pool. In another three years, this demand is expected to be twenty times greater than the available manpower.

Analysts caution that hiring based on specific talents could come at a higher cost. This could possibly impact the stellar margins that Tech Mahindra has seen over the past two quarters.

“Talent availability is trumping the ‘rate discussion’ right now for a lot of these ‘very much in demand’ skills,” said Agarwal.

Tech Mahindra has four vertices in its line of sight
According to Tech Mahindra’s CFO, Manoj Bhat, the company will be doubling down on four vertices — communications, manufacturing, healthcare and BFSI. “That is where our investments are going to be,” he told Business Insider.

And, within these vertices, cloud, artificial intelligence (AI) and digital is where the company is looking for the right set of skills.

“Full chain execution — where somebody can deliver a program effectively — is more important to clients than just finding the right individual talent,” explained Agarwal.

More deals, more money, and the need for more talent
According to Bhat, Tech Mahindra’s pipeline today may be at an ‘all time high’. “It’s a very big pipeline today. We should see acceleration of deal wins going into Q4 and beyond, hopefully,” he said.

And, with more deal wins, having the right talent on hand is more important than ever. COVID-19 has highlighted the drawbacks of what happens when a business doesn’t go digital, which is why businesses want ways to access their customers in a manner that is not solely dependent on a physical connection, according to Bhat.

“A lot of customers are also looking at total outsourcing in a very different manner, which will then allow them some sayings on their operational spends, which will help fund a lot of these initiatives,” he explained.

On the one hand, talent is going to get more expensive as the demand-supply gap widens. But, at the same time ‘work from anywhere’ is going to help expand the fresh talent pool as Indian IT services companies like Tech Mahindra look to capitalise on the third wave of outsourcing.

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