Digital transformation trajectory to continue for few years; attrition to remain elevated: Tech Mahindra

Milind Kulkarni, CFO, Tech Mahindra, believes that the digital transformation trajectory will continue for the next few years. He is of the opinion that low base effect might impact growth in FY23. Kulkarni explains that as a whole, the IT sector benefitted from a low base in 2019-20. Kulkarni added that the company witnessed growth across geographies and industries.

He said, "Our reading is that the digital transformation trajectory, which we saw last year, will continue for a couple of years. Last year, there was a base impact as well, so that will marginally taper out; growth will therefore be lower than what we have seen in 2021-22."

He added, "We have seen growth in all the geographies. Obviously, US, Europe will see a higher growth rate, but across all the geographies and industries, we have seen the digitisation movement. So I think it's at least going to continue for the next couple of years."

On attrition, Kulkarni expects it to remain elevated. However, he believes that the IT companies may see a marginal tapering of attrition on a quarter-on-quarter (QoQ) basis.

"Attrition continues to remain elevate. All the companies might have seen a marginal tapering of attrition but that's marginal, on a quarter-on-quarter (QoQ) basis. So it will continue to remain elevated but QoQ, it will slow down," he said.

On hiring, Kulkarni believes wage cost pressures will continue going into 2022, especially for specific digital skills. He noted that some slowdown in hiring in the coming year is likely as compared to the current fiscal year. "It will be slightly lower than what we have seen in 2021-2022," he said.

According to him, only those Indian IT companies that can manage supply-side constraints will do well in FY23. He said, "Today, while demand is robust, the major issue that IT companies are facing are the supply side challenges and those that can manage these well will benefit more."