Mohit Joshi speaks to Niraj Shah about Artificial Intelligence, Tech Mahindra's performance expectations, and more.
Category
📺
TVTranscript
00:00 Well, thanks for tuning into this conversation.
00:02 It's our last conversation at the WEF,
00:04 but we saved the best for the last, if you will,
00:06 because it's the first time that we are talking to Mohit Joshi of Tech Mahindra.
00:10 He's in WEF as the head of Tech Mahindra for the first time as well.
00:14 So, Mohit, confluence of events,
00:16 but thanks so much for taking the time out.
00:17 Thank you, Niranjan. It's wonderful to be here with you and really
00:20 appreciate being the icing on the cake and the cherry on the top at the absolute end.
00:25 Both and more. I'm sure of it.
00:27 Okay. So, let's start with this whole conversation,
00:31 the macro conversation around AI.
00:34 The last four days, we walked on the promenade.
00:36 Everybody talks about that.
00:37 What's your view? Because I must say,
00:39 Anisha was here and he said that AI is great,
00:42 but maybe the hype around AI is a lot more than what it should be.
00:45 What's your thought?
00:46 Look, I think it's a very powerful technology,
00:49 and obviously, it has evolved over time.
00:51 So, what we had earlier was machine learning,
00:53 and what we have now is a more powerful tool
00:59 that allows us to converse almost in natural language through Gen AI.
01:03 It is a powerful tool.
01:05 What we have to do is we have to figure
01:07 out the use cases for the underlying technology.
01:10 Because for most businesses,
01:12 the transmission that they want to drive is through use cases.
01:15 I feel that three clear use cases are emerging for the use of AI.
01:20 The first use case is very clearly from
01:22 a contact center perspective or a digital deflection perspective.
01:26 Can I understand before you call a contact center about what you want?
01:29 Can I, instead of having an agent speak to you,
01:32 can I have a chatbot speak to you?
01:35 I think for a contact center rep as well,
01:39 to be able to understand your requirements perfectly,
01:42 to be able to anticipate your needs,
01:44 I think that's a very powerful use case.
01:46 I think the second very powerful use case is from a talent perspective.
01:49 How do we look at the talent that we have within an organization?
01:53 How do we look at the talent outside?
01:55 How do we do skilling at scale?
01:57 How do we do hiring at scale?
01:59 How do we figure out what people are best at?
02:01 How do we make the best use of them?
02:03 I think that's the second very emerging powerful use case that we're seeing.
02:07 The third use case, which is the one everybody is talking about,
02:11 is about developer productivity.
02:13 A lot of programming, a lot of testing,
02:15 a lot of design can automatically become automated,
02:20 can become more intuitive.
02:22 So these are the top three use cases,
02:23 but clearly there are millions of use cases for every industry.
02:27 There are anti-money laundering and client onboarding use cases for banking.
02:31 There are field services and network monitoring
02:35 and energy usage use cases for telecom companies.
02:38 There are computer vision use cases for auto companies.
02:43 So a confluence of use cases that can help drive greater productivity,
02:48 higher levels of sales, better customer satisfaction.
02:51 >> Okay. So we were talking to this global chairman of ABB,
02:56 who said that he kind of
02:59 rubbished the idea that corporates are ready for AI.
03:01 They are not, according to him.
03:02 One, I would love your view on that point.
03:05 Part two, if corporates are not ready and they have to adapt to this via
03:09 usage of say experts like yourself or your company.
03:13 Then on another hand,
03:15 there's also this presumed increased cost that will come in because
03:19 of enhanced security protocols that will be required,
03:22 because everybody is on Cloud, so to say.
03:24 How do you think IT costs,
03:29 IT service costs for corporations across the world over the course of the decade shape up?
03:33 Do they rise up materially?
03:35 >> Yeah.
03:36 >> What's your view?
03:37 >> Well, look, my own sense is that if IT costs are rising,
03:41 it is because consumer behavior is changing.
03:43 Now, let's say I'm a consumer goods manufacturer.
03:47 I can say my IT costs have gone up from 3 percent to 10 percent.
03:50 It's a disaster. But equally,
03:52 I could say that the percentage of my stuff that I used to sell,
03:57 direct to consumer, has gone up from 0 percent to 50 percent.
04:01 The direct to consumer sales that I do is a lot stickier,
04:05 gives me better margins.
04:06 So IT costs are not rising in isolation.
04:08 It's not like the business is the same and my IT costs have increased.
04:12 The shape of my business has changed dramatically.
04:14 As far as AI is concerned,
04:16 I think what corporations or enterprises are struggling to do is to
04:20 figure out meaningful use cases that can be deployed at scale.
04:24 The challenge is deployment at scale.
04:26 Everybody is doing experimentation.
04:28 Everybody is doing these proof of concepts.
04:31 We have to be able to deploy at scale,
04:33 and which is why I said the use cases are on talent,
04:35 the use cases are on developer productivity,
04:37 and the use cases are on the contact center,
04:40 are possibly three areas where there is deployment at scale across industries.
04:45 >> Okay. So evolving landscape,
04:47 maybe we'll get better answers as the course of the year or the next two years go by.
04:51 >> Yes.
04:51 >> You would reckon?
04:52 >> No, for sure. Look, like any other technology,
04:56 in the short run, maybe it'll give less than what people have thought.
05:00 In the long run, it'll give significantly more than what people had thought.
05:04 So I think it will truly be a transformation.
05:07 This is unlike some other technologies in the past like blockchain,
05:10 for instance, that were more of a chimera.
05:13 This one is very real.
05:15 >> Okay. So thanks.
05:17 That's one thing out of the way.
05:19 Now, about our client's things,
05:22 and a lot of chatter around with the discretionary spending could pick up in 2024,
05:28 early half, latter half, etc.
05:30 The data that came out recently from the US, not as bad.
05:33 So that disrupts the rate cut conversation as well.
05:36 How do you see the macro landscape?
05:38 >> Well, the macro landscape is impossible to predict.
05:41 If you look at it last year,
05:43 if you're sitting here last year,
05:45 the common consensus,
05:47 and this is consensus held by 99.9 percent of all economists and business people,
05:51 was that the US would be in recession and China would grow at six percent plus.
05:56 Fast forward one year, the US actually grew very,
05:59 very strongly and China growth was not too bad,
06:02 but certainly below six percent.
06:04 So it is impossible to predict the short-term with any level of accuracy.
06:09 But what we can see is some trends are very clear.
06:12 For instance, the trend around AI,
06:14 the trend around enterprise technology,
06:17 the trends around Cloud,
06:18 the trends around cybersecurity are very real.
06:20 Maybe we can argue about whether it'll grow at three percent or it'll grow at 30 percent,
06:25 but very clearly there will be growth.
06:27 So while it's impossible to say whether the upturn will come in Q2,
06:32 or in Q3, certainly there will be an upturn.
06:34 In the long run, the role of technology is going to become more important.
06:39 The challenge I feel is that when things are going well,
06:42 nobody thinks the parties are going to stop.
06:44 When things are going poorly,
06:45 people never think that there's going to be an upturn.
06:47 >> That's true. So tell us about your client conversations.
06:51 In some sense, newer conversations as the head of [inaudible] ,
06:54 also newer conversations at the start of the year as well.
06:57 So how are client conversations going?
07:00 >> So look, I think clients are very interested
07:04 in what the new technology can do for them.
07:06 Clients are very interested in what AI can do for them.
07:09 Clients have invested very heavily in
07:10 data analytics platforms that they feel will give them significant benefits.
07:14 So for instance, telco operators are very keen on
07:17 seeing how they can improve the longevity of their clients,
07:20 how they can get an ARPU uplift.
07:23 But equally, they're very interested in seeing how they can get
07:26 more energy consumption or lower energy consumption in their networks.
07:30 They're very interested in seeing how they can drive better customer conversation.
07:34 So the technology-related conversations are very broad-based.
07:38 I would say there are broadly on three things.
07:40 Can you help me become more productive?
07:43 Can you help me sell more or can you help me get better client outcomes?
07:49 Finally, can you change the shape and the structure of my organization?
07:53 Can it become flatter?
07:54 Can it become leaner?
07:55 Can it become more adaptive?
07:57 Can it learn more quickly?
07:58 Can it become more agile?
07:59 So these are the three things people ask us for.
08:02 Help me become more productive,
08:03 help me sell more or have better outcomes with customers,
08:06 and help me transform my organization.
08:08 >> Yeah. But is there an element of discretionary spend conversation about when
08:14 that could show some meaningful comeback
08:16 also weaved into these conversations or is it difficult to predict that?
08:19 >> Well, see, there are so many.
08:22 It is not just one big.
08:24 See, spend is not one lumpy piece.
08:27 Spend could come back in banking,
08:30 but could weaken further in telecom.
08:32 Spend could come back in Australia,
08:34 but weaken in Korea because we are not looking at
08:39 one unified direction for the global economy across industries.
08:43 That would take a massive rebound.
08:45 See, nobody is talking about a post-COVID type bounce,
08:50 where all sectors, all geographies,
08:53 all economies are booming.
08:54 So we're not going to have one hockey stick move across the world.
08:58 >> But for young other markets, let's say, as they stand right now.
09:00 >> Yeah. I think for, look,
09:02 my own sense is manufacturing has stayed resilient through the crisis.
09:07 In banking and financial services,
09:09 people are talking about some sorts of green shoots emerging.
09:13 In telco, look, everybody had a very brutal 2023.
09:17 So hopefully, there will be a comeback in 2024.
09:22 >> Okay.
09:22 >> But again, it's impossible to say
09:24 whether it'll be in three months or in six months.
09:27 >> Now, tell us as you and this arch tech Mahindra from now for the next three years,
09:34 two things. One, it's had a difficult recent past.
09:37 So ignore the fact that there's a base effect in play,
09:40 but do you reckon that,
09:42 forgive me for using the term,
09:44 but glory days around a lot of headline numbers,
09:48 could they come back sooner rather than later,
09:51 part one, or will it take its natural course?
09:53 Two, with the decades of experience in BFSI that you bring,
09:58 does it make a larger presence felt in
10:01 the tech Mahindra P&L over the course of the next two or three years?
10:04 >> Yeah. So there's a couple of things.
10:06 One is obviously, we're going through our silent period,
10:08 so I'm just going to give you a broad indicators.
10:11 My own sense is that I've been in the job as the CEO for a month.
10:14 So it's too early for me to lay out a detailed roadmap of how things will evolve.
10:20 But I can tell you a few things.
10:22 One is, from what I've seen of the organization,
10:24 we have an incredible talent base.
10:26 We have an incredible talent base.
10:27 The company has a very deep engineering heritage.
10:31 Because of the strength of the Mahindra brand name, especially in India,
10:36 there is a very strong sense of employee loyalty,
10:38 which is why we have the lowest attrition rates,
10:41 and we have a truly experienced workforce.
10:43 I feel from a customer perspective,
10:46 while obviously we have unique strengths in telecom and manufacturing,
10:49 we also have a billion dollar plus business in financial services.
10:52 We've got a very robust healthcare life sciences business,
10:55 and we have emerging strengths in retail and logistics in utilities.
11:00 So we've got a very diverse customer base.
11:03 Now, given the fact that, like I said,
11:06 tech spends are increasing,
11:07 we have a good talent base,
11:09 we have a good customer base.
11:10 I feel with the focus that we're driving on our largest accounts,
11:14 with the focus that we're driving on service line innovation,
11:17 and the huge amount of support that we have from our parent,
11:19 which is present in so many businesses,
11:21 and gives us the subject matter expertise,
11:23 I'm very confident that this company will continue to be a powerhouse.
11:29 BFSI, we already have, like I said, a billion dollar business in BFSI.
11:35 My own sense is, if you look at every single service provider,
11:40 their BFSI practice is the single largest portion of their revenue pool.
11:45 It is not for us.
11:46 And I suspect that we will grow our BFSI business at an outsized pace
11:51 over the next few years.
11:52 I'm very confident it's a business, like you said, I understand very well.
11:56 And I'm very comfortable speaking to boardrooms,
11:59 speaking to CIOs, speaking to business leaders
12:01 about the change imperatives in that business,
12:03 and how we can help.
12:05 Actually, that's something that I suspect that you will grow at a fast pace.
12:09 I was just looking for confirmation because of the experience
12:11 that you bring to the table out there.
12:12 Okay, so that's one thing.
12:14 Secondly, again, as long as it doesn't hamper your silent period,
12:19 ER&D, it's a pocket that a lot of companies are either specializing in,
12:25 or traditional services companies are also making, say,
12:29 pocket acquisitions to try and make a presence felt there.
12:32 You have an auto parent, so to say.
12:35 What do you think about that practice?
12:36 No, I do think that we have a very strong engineering practice.
12:39 And if I look at our auto expertise, for instance,
12:44 it's everything from product design,
12:46 where in addition to our homegrown capabilities,
12:49 we also own Pininfarina, which is the leading Italian designer.
12:53 We have very strong production capabilities
12:56 in terms of building out the factories of the future.
12:59 We have very strong performance capabilities, right?
13:02 For instance, post-sale warranties.
13:05 We have a really powerful platform for auto that clients work with.
13:11 So across the board, whether it's after-sales service,
13:14 or it is production, or it is product design,
13:16 we have very strong capabilities.
13:19 Apart from the more traditional ER&D capabilities,
13:22 we've also acquired a very significant digital engineering capability
13:27 because of some acquisitions, so Digital On Us in Latin America
13:31 and CtCo in Eastern Europe.
13:34 So putting these together is a very powerful combination.
13:37 One of the things that we have done during our more recent reorganization
13:42 is the pockets of engineering capability that were being run distinctly.
13:46 So we were, for instance, running digital engineering
13:49 distinctly from integrated engineering services,
13:52 distinct from many of our chip design capabilities,
13:57 distinctly from many of the portfolio companies we had acquired.
14:00 We have now put it under one leader,
14:02 and I'm very confident that that integration also will help us.
14:05 You spoke about the parent, and the parent clearly gives us
14:08 an enormous amount of access,
14:10 not just to the work that we're doing for them,
14:13 but also their huge supplier base across the world.
14:16 And the Mahindra Group has a tremendous amount of goodwill
14:19 from all the suppliers, which we will be looking to leverage.
14:22 Okay. Finally, just a word.
14:25 In the four days out here at Davos,
14:29 almost everybody tells us that the India chatter is very loud,
14:32 very high, and very positive.
14:35 What have you felt about this?
14:37 No, I certainly feel so.
14:38 Look, this is my 10th year coming to Davos.
14:41 And obviously, look, Indian companies and the Indian government
14:44 have always had an outsized presence in Davos.
14:49 I think the view has been that many times in the past,
14:52 the promise of economic growth has not really materialized,
14:55 and we have sort of almost snatched defeat from the jaws of victory.
14:59 This time around, it feels real, right?
15:00 I think people are reassured by the stability,
15:03 people are reassured by the economic growth
15:06 that they're seeing across sectors,
15:08 people are reassured by the global ambitions of groups like Mahindra.
15:13 And so I feel that this time around,
15:15 it certainly feels like a story whose time has come.
15:18 Wow. Maybe India's moment to lose, if at all.
15:21 But Mohit Joshi, wishing you all the best in your new journey.
15:24 Thank you so much.
15:25 And we'll be there to quiz you at almost every single quarter
15:29 at the end of the quarter
15:31 to try and understand how we are shaping up this piece.
15:33 But thank you for talking to us today.
15:35 Thank you so much, Nilesh. Thank you.
15:37 (MUSIC)
15:40 (MUSIC)
15:44 (MUSIC)
15:47 [BLANK_AUDIO]