Tech Mahindra Ltd. closed its third straight quarter of deal wins above $1 billion, reporting total contract value of $1,078 million for the June quarter, up 33.3% year-on-year, according to the IT firm's Q1 FY27 earnings report. Operating margin also rose to 14.4%, up 330 basis points year-on-year.
Joshi pointed to productivity guarantees written into long-term contracts as one example. "Getting into a 70%, 80% productivity benefit over a five-year deal, I feel is getting into productivity benefits that are not visible today without very significant process or system changes by the client, so that is where we'd hold back," he said.
The second example concerned infrastructure pricing, with Joshi noting that memory and chip costs have been rising sharply. "If you're seeing a pricing inflation of 20% year-on-year, to tell clients that you will hold the price for a three or five year deal, we think is a forward call which doesn't really make sense," he said, adding that Tech Mahindra is "not willing to guarantee those for the customer."
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This ties into the company's margin target for the year, which stands at 15%. "We have been incredibly disciplined in terms of our deals," he said, adding that the company ensures all deals are "at least in the long-term, accretive to our margins."
On whether deal sizes could climb further given the company was nearing its margin goal, Joshi said large-deal outcomes remain "quite binary" and hard to forecast beyond a quarter or two, but that Tech Mahindra would "continue to stay aggressive" on pursuing deals while staying mindful of an upcoming wage hike and productivity pressures tied to AI adoption.
Joshi did not name the competitors or specific deals he was referring to, nor did he specify how many deals Tech Mahindra has lost or declined to bid for as a result of this pricing gap.
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