Tech Mahindra has improved its growth and profit margins under Mohit Joshi, putting the company closer to its FY27 targets despite a tough IT market.
When Mohit Joshi took over as CEO and Managing Director of Tech Mahindra in December 2023, the company’s performance needed more than a change at the top.
Revenue growth had weakened, margins were under pressure, and the company had set itself an ambitious three-year target: grow faster than its Indian IT-services peers and lift EBIT margins to 15% by FY27, from 7.4% at the end of FY24.
Two years into that plan, Tech Mahindra is much closer to the margin target.
In Q1 FY27, the company reported revenue of $1.66 billion, up 2.6% sequentially and 6.6% year on year in constant-currency terms. EBIT margin reached 14.4%, up from 13.8% in the previous quarter and 11.1% a year earlier. New deal wins rose 33.3% year on year to $1.078 billion.
The numbers suggest that the turnaround has moved beyond cost-cutting and stabilisation. The bigger question now is whether Joshi can convert the improved operating performance into sustained growth.
A Strategy Built Around Numbers
Joshi’s first major decision was to give the organisation a clearly defined destination.
The company set out targets around margin expansion, growth, return on capital employed and cash returns to shareholders rather than relying on broad statements about becoming a stronger technology company.
That approach was supported by three broad priorities: growth, operations and organisation.
Tech Mahindra subsequently focused on improving employee utilisation, controlling costs, reviewing pricing, strengthening key accounts and becoming more selective about the contracts it pursued.
The objective was not simply to win more business. It was to win work that could generate acceptable returns.
That discipline has become particularly important in an IT-services market where clients continue to scrutinise technology spending and pricing.
Margin Recovery Has Been the Clearest Result
The improvement in profitability is one of the strongest indicators of the turnaround.
Tech Mahindra’s EBIT margin stood at 7.4% in Q4 FY24. By Q3 FY26, it had reached 13.1%, before rising to 14.4% in Q1 FY27.
The company has used several operational levers to achieve that expansion, including higher productivity, greater utilisation, cost optimisation and a more disciplined approach to subcontracting and project economics.
The latest quarter also delivered a 28.4% year-on-year increase in profit after tax to ₹1,465 crore. Revenue in rupee terms rose 17.7% to ₹15,712 crore.
At 14.4%, the margin is now only 60 basis points below the company’s FY27 target.
Growth Is Becoming the Bigger Test
Improving margins is only one part of the turnaround.
Tech Mahindra also wants to grow faster than its Indian IT-services peers, and the latest numbers offer some evidence that the strategy is beginning to gain traction.
Its Q1 FY27 constant-currency revenue growth was 6.6% year on year compared with slower growth at several larger Indian IT companies. The company also recorded three consecutive quarters with deal wins above $1 billion.
The business is becoming less dependent on telecom, historically one of its largest verticals, while sectors such as manufacturing, financial services, healthcare and retail are gaining importance.
That diversification matters because the company’s traditional telecom-heavy exposure had been a drag on growth during earlier periods.
Organic Growth Is Back at the Centre
Another significant change under Joshi has been a greater emphasis on organic expansion.
Acquisitions have historically played an important role in Tech Mahindra’s development, including the 2009 acquisition of Satyam Computer Services. The current strategy places greater emphasis on growing existing accounts, expanding relationships with major customers, and building capabilities internally.
The approach is also reflected in the company’s deal pipeline.
New deal wins reached $1.078 billion in Q1 FY27, up 33.3% year on year. Tech Mahindra said its base of clients generating more than $50 million in annual revenue increased by seven during the quarter, while all verticals recorded year-on-year growth.
The challenge now is turning those bookings into sustained revenue while protecting the margin gains already achieved.
AI Changes the Equation
The broader technology market makes that task more complicated.
Generative AI is increasing productivity and creating new technology demand, but it is also changing the economics of traditional IT services. Some software-development work can require fewer people, while clients are redirecting budgets towards AI, cloud, data and modernisation projects.
Tech Mahindra does not separately disclose AI revenue, making it difficult to measure how much of its current growth is directly attributable to the technology.
The company has nevertheless been increasing its focus on AI-led services and partnerships. In 2026, it launched initiatives covering agentic development, enterprise modernisation and AI-powered transformation, while also expanding partnerships across cloud, cybersecurity and enterprise technology.
For Joshi, the opportunity is to ensure that AI becomes a source of new business rather than simply a tool for delivering existing services more efficiently.
The Talent Reset
The transformation has also involved changes in the organisation itself.
Tech Mahindra has brought in senior executives from different industries and strengthened its internal training and reskilling programmes. The company has also focused on identifying employees who can move into larger leadership roles as the business expands beyond its traditional areas.
Employee attrition stood at 11.8% on a last-twelve-month basis in Q1 FY27, according to the company’s results. Headcount stood at 146,760 at the end of June.
The next challenge is ensuring that the organisation has enough specialised talent to support growth in areas such as AI, cloud, data, consulting and industry-specific technology services.
The Final Stretch to FY27
Tech Mahindra is entering the final phase of Joshi’s three-year transformation plan with its margin target within sight.
The harder part may now be sustaining growth while the global technology-services industry deals with cautious client spending, pricing pressure and the disruption caused by AI.
The company has made measurable progress since FY24. Margins have recovered sharply, deal wins have strengthened, and growth has returned across several business verticals.
But the turnaround will ultimately be judged on whether those improvements can hold at a larger scale.
Joshi’s next phase is therefore less about stabilising Tech Mahindra and more about expanding it without giving back the operational gains already achieved.
The company has moved significantly closer to its FY27 targets.
Now it has to prove that the improvement can last.
Read more news and follow us on Instagram
Source: Business Today
