Ladies and gentlemen, good day and welcome to the Tech Mahindra Limited Q2 FY 2022 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode the the signal and operator by pressing star then 0 on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. CP Gurnani, MT and CEO for Tech Mahindra.
Thank you and over to you sir.
Hi, thank you. Good evening and good morning. Welcome to Tech Mahindra's Quarter 2 FY 'twenty two results. Thank you all for joining us today. Thank you all for being with us to the few quarters which for many of us on a personal track the It has been a challenging quarter on the business side.
It's been an exciting quarter. Your company's mantra for fashion And purpose to drive sustainable profitable growth, I think we have been able to now deliver consistently for several quarters now. I know my team of 141 ks people, 141 ks associates are very, very happy to report highest sequential growth in the past decade. We have remained committed on our margins. We have also seen that Your company's investments on 5 gs driven technologies, your company's commitment to customer experience management the It's showing results not only in CME, but in all the key growth verticals, VFSI, HLS, High-tech.
The I mean, it's just the impact is across the geographies and across various verticals. As you know that we believe the customers in various segments and the technology spend We also feel that the digital transformation wave is almost a necessity And is doing a multiyear growth curve right now. Our quarterly performance reflects some of the efforts your company has put in. We are reporting a revenue of 1472,000,000 At constant currency, it's a 7.2%. For Telecom, it is the 7.7% for enterprise business, 7%.
The deal momentum continues. The We are reporting a deal wins of about $750,000,000 and we believe that the trajectory the of similar deal wins can be continued. High-tech sector has grown Reasonably well and I think we'll continue to grow. HLS and BFSI are leading the growth for the enterprise segment. We did announce an acquisition of Lordstone, which helps us scaling the OPD and Digital Products Engineering Business.
The Board has also authorized special dividend of rupees 15 per share. And as we have the discussion of capital allocation policy in detail. This only shows that we remain committed to the return excess cash to the shareholders. While we have continued to invest, we have continued to the So overall, I can only say is that Happy to see growth across all the geodes. Happy to see growth the Led by competencies, growth, which reflects our confidence that we have the higher 15,000 associates so that we have invested in talent for future growth also.
Overall, thanks to the vaccination drive, we are seeing increasing number of people coming to office. So firstly, we have not put any What I would say, any legislation as yet are people trying to work from office. The I think most people want to come to work. We only request them that for other safety of others, the They should be double vaccinated. But in general, we are seeing the hybrid working evolving on its own.
Me and my management team We'll be meeting all of you on 11th December. 10th December is when we do an informal dinner In Pune, 11th is when we have meet the management, hear directly from the management, showcase some of the presentations and demos. So I look forward to meet you all in person All virtually again on 10th 11th November. I'm happy that my management team has joined today's session. The To take you through the numbers, I'm going to request our CFO, Milim, to take over the proceedings from now.
The Welcome, Vivek.
Thank you, CP. Good evening to everyone or good morning depending on the time Let me cover the company financials in bit more details. So our revenues for the 2nd quarter were RMB1472.6 million As against, RMB383,600,000 in the quarter 1, which is a sequential growth of 6.4%. The We had a currency headwind of 80 basis points. So on a constant currency, We had a 7.2% growth.
As CP said, this is the highest growth the sequential growth in the last decade and growth CME as well as enterprise verticals have grown quite well. JME vertical grew by 6.7%, while enterprise vertical grew by 6.3%. Within the enterprise vertical, technology, BFSI And HLS showed a healthy growth, showed a very healthy growth. We had another quarter of strong deal wins and we reported TCV of 750,000,000. And again, what is satisfying is broad based across new verticals.
The On operational front, our EBITDA for the quarter was about 2.70 1,000,000, the growth of 6.1 percent quarter on quarter. Our EBIT margins were flat at 15.2%. The Now the tailwinds came from in terms of operating leverage as a result of growth. The They were partially they were offset by lower utilization because we recruited about 15,000 people in the quarter the And utilization dropped by about 1% and higher subcon costs as we are not able to deputy of our people abroad due to travel restrictions. So and some costs tend to be higher than the cost of our associates.
So now if I moving below the midline, Our other income was similar as last quarter at about RMB 38,000,000. The tax rate for the quarter was high at 29.4% due to one off tax charges in one of our subsidiaries. This is as against 24% in the last quarter. The even better way to look at it in the first half tax rate, It stood at about 26.7 percent, and we expect our normalized tax rate to be in the range of about 26%. This one off tax charge in the quarter.
The net profit margin was 12.3% the As against, a decline of about 100 basis points over quarter 1. We had a healthy quarter in terms of free cash flow. And our free cash flow for the quarter was about RMB 188,000,000, about 104% of our pack for the quarter. Our DSO days We're down from 93% to 92% despite acceleration in the sales. The We continue to follow our rule based hedging policy.
The total hedge book as of 13th September was about $2,392,000,000 as against $2,221,000,000 in Q1. Based on hedge accounting treatment, a gain of $21,200,000 last quarter it was about $7,500,000 has been taken to P and L and a gain of $61,600,000 has been taken to reserves. Last quarter that was lower at about $23,100,000 And this gain increase in Edge Gain is because of the depreciation of the sorry, depreciation of Euro And Sterling against the USD. USD INR have remained almost the same level in the quarter. We had a cash equivalent cash and cash equivalent of about RMB 1626 1,000,000 the And in line with our capital allocation policy, Board has announced a special dividend of INR 15 per share.
The The record date is for the interim dividend is 5th November. The overall good set of numbers. We continue to we look to maintain our growth momentum and the margins As we enter the second half of the year. With this remarks, I Now open the floor for questions. Thank you.
Thank you very much. Ladies and gentlemen, we will now begin the question participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue The first question is from the line of Mukul Garg Promodilah Osoir. Please go ahead.
Thanks. Two questions from my side, 1 on revenue and 1 on employee ratio. On the revenue side, what was your performance versus expectation this quarter. What especially in the communication vertical, what led to such a strong growth? Should we expect this to continue?
The And what portion of it was contributed by the large deal wins which we had in Q4? On the In the employee side, exceptional employee additions this quarter from your side, about 15,000. The But your utilization continues to remain almost at all time high levels ex of trainees. So was there a meaningful impact on the net number from end of quarter additions or trainees? And Would this have any impact on your cost in the 3rd quarter?
Thanks, Muklu. This is Rohit. Thanks for the question. So maybe I'll first talk about headcount additions and then Talk about revenue and then I'll pass it on to Manish to talk a little bit more on cost. So just on the headcount side, we've added as you quoted, we've added close to 15,000 people.
If you look the split, it's equally split between BPS and IT. IT has grown approximately 7,000 people. The The additions that kind of ramped up through the quarter, so it's not a quarter ending phenomena. It's to the quarter increase. And if you look at the utilization, we're down 100 bps versus last quarter.
So that's an account of that, that Milan already quoted. The So we continue to monitor this very closely. We have our system processes that we've established in terms of operational efficiency, how we continue to get people, train them and make them billable from a project requirement standpoint. So As you kind of correlate
that,
the last quarter, the previous quarter, the All of this is related in that way, right? So we continue to see and fulfill that demand through the tradition and that's the momentum from a pipeline perspective that we're seeing the As we move forward. And in BPSI, typically, the next quarter is a seasonal quarter for us. It's a ramp up. So that's the reason you see an increase there as well.
That's what we had come. If you look at revenue on the comm side, there are a few factors driving growth. We've got 5 gs which you articulated last time, which is becoming relevant for us and you've invested in that as you know, being a strong player in that field for a while. It's very, very important for us and we continue to see results coming out of it. And then similarly, the other side of the growth the incom is also coming from legacy to digital modernization, right?
So those are factors that is helping us. From a large deal contribution perspective, You're right, we continue to see that growth momentum. We had the $1,000,000,000 $800,000,000 and then $750,000,000 for the last three quarters as flow. And comms will continue to get contributor on all of that where the deals are ramping up and you see the growth coming through those as well. So I'll let Manish Also talk a little bit more specific on comms to respond to you, Mukul.
Thank you, Rohit. And Mukul, thank you for your question. But I guess there's only one thing that I can add to what Rohit said. 2 things. 1, the Like you pointed out, the growth is pretty secular in terms of the growth lever that we had always been I think whether it is 5 gs, whether it is modernization or large deals or account development, They all seem to be working quite fine as we speak.
And hence, the question to your broader question that we expect growth momentum to continue. We do expect it to continue. We expect the lot more focus that we will continue to bring in digital transformation in helping service providers and others in their 5 gs journeys, both at a network level as well as at process and systems. And we will continue to be on the forefront of helping our clients transform their legacy all the traditional systems that also continues to remain a pretty strong focus area for us. And yes, I guess that's Vikram what Rohit said and the conclusion by Agarwal.
I hope that answers your question.
The Sure. That was quite clear. Thanks for both. Thank you
both for answering the question.
Thank you. The next question is from the line of Gaurav Prateria from Morgan Stanley. Please go ahead.
Hi, congratulations on spectacular performance. The Two questions. The first question is about if you can provide some color on the kind of deal activity which you had won during the quarter. Is it the few very, very large deals that contributed to this or there's a large number of smaller deals. The And similarly, within the pipeline, if you can provide some color of what kind of leads are there and what proportion of the overall leads are like 5 gs related.
The So from a deal with perspective, it's quite broad based actually. There's it's quite set out in terms of geography in terms of the segment and competency. So it's quite a quite spread. There's no one call out that I can really make that is significant from a value perspective, right? When you look at the type of the wins that we've had, So maybe I'll give you some flavor of the areas that we're kind of working with the customers.
So One of the examples is that we won a multiyear strategic deal with Fortune 500 companies in transforming their global applications from digital, the Which was legacy, right? So that's one example I spoke earlier as well. We're also working with one of the largest electricity distribution utility company Implementing their large customer information system, right? That's another area that we're working on. We're working with a large automotive OEM for engineering services for their vehicle modernization, data collection, data center, etcetera, right?
The We are working with 1 of the largest railroad companies in North America providing mobility managed services. So it's kind of quite broad based, if If you really look at it and contribution is strong to everybody. So it just helps us feel better about the momentum, right? When you look at the pipeline as we move forward, we continue to see the buildup of the pipeline in the same fashion that we've seen in the last 2, 3 quarters. The We've given adequate focus from a frontline perspective on building the pipeline, qualifying it and the right support team, helping with the client partners with the customer facing team to help them position the technology in front of the customers.
Specifically to 5 gs, I would say, quarter over quarter continuously seeing more and more pipeline being added by the team, the more pipeline getting converted into TCV business and that's adding to our increased contribution revenue as well. So As Manish had articulated earlier also, 5 gs contribution is becoming important for us As we see more activity and returns to the investment that we've done in this space. Anything that Manish you would like to add on the pipeline
the No, I think the only thing I would say is to continue the rhythm and the momentum as we had described the last quarter, 5 gs is going to be a dominant part of both our wins and hedge engagements as well as our funnel and pipeline. The And that is a positive sign. We have been consistent about this call for a few years now that the investments that we've been making in the ecosystem, on the network and within the telecom service provider, the Infrastructure and Systems have continued to reap good benefits for us. The And I can assure all of you that your company will continue to remain more invested in this tailwind the than ever before as we go forward.
Thank you. My second and last question is around the market. If you could lay out some of the puts and takes headwinds and take wins as far as the second half is concerned the And how should one think about margin given the challenge around rising attrition, which potentially can further increase the in the coming quarters. Thank you.
Yes. Thank you. So from a margin perspective, the While we are at constant quarter over quarter, as Melinda has articulated, they were operating leverage, which is favorable for us, which is the growth the That we're seeing adding to the margin. But with added headcount, we're seeing a lower utilization the The supply side challenges have increased, cost is adding to that pressure. Now when you look at our strategy around hiring from campuses, doing more fresher intake, help training them, getting them to the projects the ready to be deployed.
I think that's helping us to mitigate some of the pressure, and we'll continue to take that action as we move forward. The So that's kind of the way we're looking at the margin from a positive and negative standpoint. As we think about second half. I would say some of the travel might come back and some of the economies open up, the But still not significant. While our subcon cost, which is at very elevated levels right now, Has a potential to be replaced by full time employees.
That's kind of offsetting the action that we see. The The operating margin of the deal, the momentum from a pipeline perspective continues to be strong. So that story will continue to play out. The And then if you look at Vira can't give guidance in second half as per our policy. But at the beginning of the year, we stated the That we'll have double digit organic growth and we'll deliver 15% EBIT positive of that.
So I think we'll continue to stick on that view from a margin standpoint as we continue to see a growth environment. And I think from an attrition standpoint, quarter over quarter good part is that it stabilized for us. While we continue to monitor and take corrective actions with our the CPO, Chief People Officer and the team. I think that's a positive sign that it's stabilized for us. So that's the way we look at it.
Just to add a question, do we foresee any further levers from improvement in the subsidiary our portfolio company margin or bulk of it has already played out?
It's
the In the progressive stage right now, I think some of the companies have gone through the the transformation of the centralization, as we call it. Some are in their journeys towards it, so it's still work in motion. The So it will continue in terms of how we move forward to see that then.
The Grec Securities. Please go ahead.
Yes. Thanks for the opportunity and congrats on good execution. Just on the communication side, Manish, while we do understand that what we are hearing from large caps and the mid caps The large transformational deals clients are in a matter of urgency despite spending instead of spending time on the process of articulating 2 to 4 years deal. We are breaking down into smaller deals and awarding fast. Is it the same trend are you witnessing in the communication And for you to say the growth momentum may continue.
Manish, you want to take that?
Yes, Sandeep, yes, I got it. Can you hear me? The Yes. Excellent. Sandeep, thank you for that question.
And yes, that indeed is the one of the trends that we are seeing as far as transformation is concerned. The way we like to characterize it as these are large transformation. The speed is of essence. There is a level of urgency the in modernizing the 4 big pillars that we have been calling out very clearly as areas of transformation for our customers. 1 is from an infra compute standpoint cloud.
From a customer engagement standpoint, the overall customer experience journey the And digitizing that in terms of sales and commerce and service on both network modernization, which is largely driven by, Again, cloud and 5 gs. And of course, from an engineering standpoint the From a software transformation standpoint, that also is another big lever. So what's going on as far as digital transformation is that the clients have put together the North Star aspiration of where they want to be. The We recognize that you can't just have one single large project that defines that because things evolve every single day. That's the new mantra as far as trying to emulate the web scale development models.
And hence, what appears to be smaller deals the are actually larger programs, which are broken down into agile projects. The And we are indeed as well seeing a lot of that trend as we speak right now.
Okay, helpful. And Manish, just a follow-up. I think growth in Net Communication has, on a Y o Y basis, has come back strongly. So with 5 gs now becomes a clear payment on the demand, you believe at least a double digit growth in the foreseeable future over next 2 to 3 years Quite achievable going forward.
We will continue to remain focused on that. And like I said earlier, the our funnel continues to look strong. Our engagements across these 4 transformation pillars the It's good. And the urgency that the clients are showing towards transforming themselves also remain very positive. So all in all, The indications are pretty good.
Okay. And last question, Rohit, just on margin follow-up. Generally, Q3, Q4 directionally we have more tailwinds than the headwinds because some of the Comviva license sales also comes as a tailwind to the margin. The So this time also it could be true or you believe supply side pressure will negate the tailwinds and margin at best can be maintained as a whole? And everybody else is showing a quantum jump in the offshoring, while our offshore levels is one of the industry lower.
So why we are not We're seeing this as a big margin we were going forward.
Yes. So Sandeep, I think maybe on offshoring first. We've been articulating and if you look at the trend from last probably 5, 6 quarters, we improved our offshoring to almost 250 to 300 basis points. There's been a significant improvement on this metric as we've articulated and delivered on it. So we'll continue to drive this metric as we move forward.
Right now, obviously, it's about from a demand standpoint, it's about Ramping up of new deals, ensuring that we get them on the right platform from a start perspective. So it's a ramp up phase that's going on. The But this metric is an important one and we'll continue to track that in long term, right? So that's a lever for us. When you specifically talked about the quarter.
I think obviously, I won't guide it, but I can talk about tailwinds and headwinds. So as you rightly pointed out, that's the seasonality that we see the typically with the comps, our business, though that seasonality is reducing slowly for us in terms of quarterly increases. The So that's going to be a factor, but to your point, the supply side pressures do continue. We continue to see that as we move forward. The And similarly, onshore demand, the restriction from a travel and a visa standpoint is also not So I think all of that factors continue to play in.
So all in all, these are the positives and negatives that we see from a margin standpoint as we move And we'll continue to drive our portfolio kind of centralization playbook that we've laid out Earlier in the year, we'll continue to drive operational efficiency and operating leverage, which is what you've seen in the last two quarters the As we see deal wins, as we see the pipeline go, so that's an area that we see in the positive direction as well.
Okay. Thanks and all the best.
Thanks, Sandeep.
Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead.
The Yes, hi, good evening. Thanks for taking my question.
I had
a couple.
The first is on the people front. How many freshers are we sort of the hired so far and what's the plan there? 2, in terms of margins, I think team. This was 2 years ago, we had 2 large deals. I think that was AT and T and Prudential.
And at that time, we actually saw because of transition cost, margins actually come off the For that period, do you think the current environment, the kind of deals that are being broken down into smaller deals, this. This is more sort of amenable to better margins. So that was the second one. And third, the Do you the business doesn't seem to be showing an operating leverage on SG and A this the It's actually almost grown similar to revenue or slightly higher. So just wondering why that is considering that we have a good 6% plus growth.
Is there any one off in there that could sort of come off going forward? Those were the 3. Thank you.
Yes. So maybe, Harsh, why don't you take the fresh air related in the headcount addition question, and I'll take the margins one after you, Harsh.
Yes. Thanks, Rohit. And listen, thank you for asking that question. I think it's a great question. As we all see the retention being a clear challenge for most companies in IT in the industry.
The I think we've really sort of focused well on the build and buy strategy. And Like you heard Rohit say earlier, we are investing heavily in building new skills And therefore, our pressure entry strategies is very clear. We have almost doubled the intake of pressures and that has significantly impacted our availability of talent. Going forward, we will continue the same strategy. And we are, as I said, maybe investing in upscaling these pressures so that availability of talent is always there.
The And just on the margin side, the From a first, I'll probably respond on the SG and A part. So if you look at it, the We're also investing from our future and growth perspective on sales and clients' the partners' roles. And I think that continued to be an important investment for us as we look forward, right? So that's an area that we've the invested and made more kind of capability build, if you will. So that's an area that we'll continue to drive.
The And I think beyond that, there's plus and minus across the various line items, but nothing significant to call out from a trend Those are the main areas that we continue to invest on. And then
Yes, go ahead. Sorry.
You had one more question, sorry.
Yes. The other question was, I was referring to maybe 2 years ago when we had AT and T and Prudential and There were sort of transition costs at that time and margins were under pressure. The question is, do you see the current environment where you have smaller large the being broken down to smaller deals. Are we is this more amenable for margins? And are you seeing sort of pricing increases the from customers considering the current environment and how broad based is that?
Yes. So I think Obviously, from a deal ramp up perspective, we still have transition cost that is a headwind as you start the deal going up. But As you think about from a patent perspective, that gets into the baseline, right, because we've had $1,000,000,000 of deal wins announced the In 4Q, an 800 and then 750 sales. As we keep on doing that across the spectrum, that transition becomes a part of the run rate. So unless the We see a huge kicker for a big deal.
That factor will play out again. And we'll as I articulated at the beginning of the year also, the When we look at the year, there might be quarterly fluctuations that we will see because of this phenomena, which still now hasn't really surfaced from the point of view of seeing too much of an upward or a downward trend. But I think from a trend perspective, the The way to look at it is more from the full year perspective and that I think won't make a difference as we move forward.
Sure. That's helpful. Just one last follow-up is I think most companies are hiring roughly 12% to 18% of their prior year headcount as freshers. Do you think we fall in that range? Or
Yes. Harsh, would you want to respond specifically on that?
Yes. So as I said, Nitin, what I've specifically outlined is that we've actually doubled the intake. So obviously, it's very clear for you to see, but the There is a huge focus on hiring of pressures and upscaling them. So really, Tom, last year, we are almost going to X.
Sure. Thanks. That's helpful. Thanks.
Thank you. The please press star then 1 on your touchtone telephone. The next question is from the line of Ruchi Berthe from BNP Capital. Please go ahead. The.
May I please request you to speak a bit louder as your audio is not very audible?
Is it better?
Yes, ma'am. Thank you.
Yes. So Manish, can you help us understand how Tech Mahindra's capability has changed in
the
the And has that changed the opportunity size or the tech spend that Tech Mahindra can capture? That's my first question. I have a follow-up.
Sure, Ruchi. Thank you so much. There are 2 things that have changed. The opportunity itself has changed in the industry. What people did in the 4 gs cycle the And it's not exactly how it is happening in the 5 gs, it's a bit more comprehensive as a transformation.
The 10 to 15 years have passed since people started investing in 4 gs. So you do need the A lot of changes in terms of how the consumers and customers are buying and getting their experiences the from their service providers. All of that has indeed changed the areas where the transformation projects are happening, number 1. Number 2, and hence that also has compelled us over the last few years to invest and change our capabilities. So I don't think the there is the Broadly speaking, yes, it is in the realm of infra and software.
But one specific thing, if I may add, that has changed for us the as against the 4 gs cycle is the network capability. Towards the fag end of the 4 gs growth cycle. We have started building capabilities in the radio deployment and construction activity. And as you know that in a very focused fashion over the last 2, 3 years, we have decided to defocus from that area. But what we have also done over the last 3 to 4 years is we have actually dialed back up our investments in the digital part of the network, Whether it is software based network, whether it is now what we call as network on cloud, which includes core, whether it is transforming the legacy OSs into a more modern orchestration type model.
And it's a longer list, on situation type model. And it's a longer list and we will definitely be sharing some of these details when we all meet the on 10th November at a technology level. But yes, to answer your question, the capabilities indeed are different the network as well as at underlying process and system transformation. There's another thing that I may want to point out is the difference between our 4 gs engagements at a broad level versus now the We used lot more of the TechEm IP and platforms as part of our solutions. That also makes a very compelling the argument in terms of how we collaborate with these other ecosystem players, which is not just based on people, but also based on people software and IP.
So that has significantly improved on the BSS side, in the OSS side and on the network cloud transformation as we call it. So I guess that's the second point I may want to highlight. And lastly, has that increased the target market for us. The target market for us in terms of the areas that we now play has indeed expanded for us. The What I and I've been saying this for some quarters that the cost of deploying of 5 gs network is the not just theoretically, but also practically substantially cheaper than the cost of deploying and putting together a 4 gs network in the past.
And hence, you don't see a material change, because there is a change in the CapEx spend of telcos, but you won't see a big substantial material change. You Saw the new dollar decreasing recycling of that dollar. Your company now is in a much better position to take advantage of those opportunities because of the investments that we have made in the past. I hope that answers your the
Yes, that's quite helpful. My follow-up is, now I mean we have been hearing from you the be it the intensity with which the competitors are bidding or the new entrants in the market, new names that you may come across. Any comments on that would be helpful.
Yes. I mean, I think the answer is There has never been dearth of intensity in the market from a competition standpoint. There are only as many telcos to the that you can go to. Our advantage has always been and we try and protect that advantage to our best abilities, which is our access rights that we have the Across the world, the number of service providers that we work with and we have had long relationships with continue to remain our the Something that we fortify all the time and we defend. And however, given that the transformation is has got different hues and different colors.
Competition also does come from different parts of the industry. Sometimes there are niche players, sometimes there are the traditional players who relate more like us and sometimes there
are tech
companies. So yes, there is It's a bit more complicated as a competitive scenario, but nevertheless, we feel pretty strong in terms of the positioning that we have carved for ourselves in this change to landscape.
Thank you, Manish. All the best.
The thank you. The next question is from the line of report from Philip Capital. Please go ahead.
So my question was basically on our medium to slightly longer term growth scenario. The hiring that we have done is exceptionally strong. I think we have another 3 week kind of an hiring impact on the 4,000,000, 15,000 net hiring in this quarter, which definitely gives us the idea that company is looking at a very strong growth in our environment. This year, of course, as we have guided to a double digit growth, but we know that this year, of course, the industry growth could be actually So we might be maybe falling a bit short of the industry as is growth rate. But given the kind of hiring that we have done in this quarter and the quarter before that as well, the Do we see, let's say, a road map or a track on which we would like to traverse and say that it's maybe 2 years down the line, 2 years down the line, we could basically match the industry growth rate in terms of our own capabilities and the demand that we see the
Yes. So I
think what we've said at the beginning of the year the double digit organic growth, right? So I think when you look at 1Q and 2Q together, first half comparative, We should right now be in the range of north of mid teens, right? So in terms of first half year on year growth, right? The So if you look at second half and how we kind of look at the pipeline and the various other factors moving forward. From what we said in the beginning, we I mean, that's kind of something that is clearly demonstrated on in terms of the first half numbers itself, right?
The Now if you yes, and if you think about obviously, I can't give guidance specifically on the second half because the We don't do that. But if you kind of look at the other trends in terms of deal wins, we've announced 750 of deal wins, which I mentioned is quite broad based. We continue to look at talent base that Harsh already articulated of going to the campuses and we've doubled that up from last year to this year in terms of our intake. I think from a momentum perspective and what we're the It's a positive trend for us. We continue to look at industry leading growth for this year.
And as we move forward, we continue to work on our internal processes and operational excellence parameter where we have The other room which you've articulated earlier as well on offshoring and few other factors that we can do better on to continue to give that headroom as we move forward. So I think what I'd say is based on all these trends, the momentum is going to continue. The And obviously, some quarters, the ramp up will be more versus the other based on the way deals shape up, the But the trend is going to be in that direction.
Got it. Just a related question on the hiring, if I may just squeeze in one more question. So on the hiring front, basically, I think it's for after a long period of time, we have seen a good bench being built up. I mean, generally our utilization, including and excluding training, tend to be almost at similar levels. Basically, we do not think that there is a limited bench that we tend to maintain.
The Given that this time of course, we are the both utilization numbers are quite different. And of course, as we mentioned that we doubled our pressure hiring, Which would take some time to basically build up. Do you believe these subcont expenses could remain in the same range as they are right now for maybe some more Maybe 1 or 2 more quarters and also we towards the beginning of the next year that we might see these pulling off? Or do you see this hiring Basically, it would replace the large part of the platform almost immediately or in very near future.
Yes. So we continue to monitor that trend. And I think the While we continue to monitor and look at opportunities of substitution replacement, Given where we are and given the growth environment, we see this trend or this percentages that you are only seeing will continue for a bit, right? And the substitution replacement, we will look at opportunities that work for us to get the margin lever up, right? So we are continuously monitoring it.
But if you look at the macro or you ask From a trend perspective, I think it will continue for some time till it goes back to the levels that we've seen in the past. So that will be a trend that we'll continue to monitor, work on and drive as and when the the restrictions from a travel visa and other aspects from a hiring perspective continue to ease down to us.
The thank you. The next question is from the line of Rahul Jain from Dollard Capital. Please go ahead.
Thank you for the opportunity. I have a similar question, which one of the earlier participants asked, but a small twist to that. Conference. You said your key edge in the 5 gs kind of an opportunity is the incumbent advantage the that we have and the diversity of the peers that you meet there. But what I want to essentially understand is that since this investment cycle by telcos in 5 gs has been far more delayed than the earlier anticipation.
Can you say that the competitive intensity has thus changed very significantly? And does the total price as well as volume side up opportunities, both are getting hampered to some extent. The And this incumbent advantage beyond that, if you can identify any other edge in this space?
Yes. Manish, do you want to
take that? Sure, sure, sure. Rahul, I think I had said the incumbency the as our platform and the license to play because we get called into conversations both proactively and otherwise. That's not necessarily the only edge. What I also called out very clearly is that 5 gs is a more comprehensive and holistic transformation.
It is not a one trick for me of dialing a button on, say, putting together a new network. It also requires the And there are other projects that get spawned in the digital space, in the back office space the And in the front end customer experience side, so that is number 2. And by that, what I mean If you recall, we've always said that TechEm will continue to stay focused on the multi pillar strategy within a service provider. And that means we will work with every CXO of our service provider because when a CEO calls for a 5 gs expansion, the onus is on different parts of the organization to also come to the party. And we are independently playing with each of these different parties within a service provider.
It's been a strength for us and it will continue to remain a focus for us. That's the second part of the edge that I had called out. And the third the Our solutions that we have built this time around, whether it is in helping people adopt the telco cloud, both in terms of adoption and modernization, whether it is in terms of helping people realize and integrate their 5 gs network, both within the lab and otherwise, the number 2. Number 3, the IPs that we have put together in helping people transform their monetization capabilities on both the consumer and the enterprise side. And that list goes on in terms of the IP and the solutions that we have built the So that also continues to us off.
So the fact that we have we are present in each of these theaters, we have the star cast to perform the transformation duties and which is really our solutions. And last but not the least that we have assembled a team the that understands the levers that we need to press in helping Our service provider customers realize the benefits of this transformation much faster. I think we're continuously being very steadfast on that investment and we'll continue to remain the focus there as well. I hope that answers your question.
Yes, yes. Just using your own analogy of Creator, When you see this
to be
a global launch or release, whatever you want to call it? As in when you see this, the real wave, of course, this You've been asked several number of times when we see the real 5 gs opportunity both within the vertical as well as 5 gs as an horizontal will kind of a play out big day for us or maybe as an industry.
Yes, actually sorry, I missed that part of the question. Yes, you're right. I think we have said the 5 gs for us are playing at 3 parts, 5 gs for service providers, which has got different nuances and I already elaborated on those. Second is 5 gs for ecosystem, which is where we are helping with R and D, product development the and other realization services around 5 gs for our larger ecosystem that continues and that's already playing out not just in the telco, but in the enterprise space as well. It's already built into some of the growth that we are seeing there.
And the third element of growth that we will see, which probably is going follow the other 2, which will be the 5 gs as a horizontal across our enterprise customers. So something that we work very closely with Jagdish and his team in deriving the value from Connectivity plus plus as we build the next gen solutions for digital transformations for our enterprise.
The Yes, right. And just one more question, if I may. I think there was an earlier question as well on this element is that the The delays from an absolute point of view, the ATV is a bit lower than the some of the recent reporting by us. And of course, we understand these things will be lumpy as well as there was a comment that the deals are getting shorter in general. But the given the kind of a trend we have right now in the industry, the What is the real annual benchmark to kind of a relevant for us the If you look at from a 12 month forward basis that this is the base number or this is the range which will be an ideal the kind of a several digit kind of a growth aspiration we want to maintain from next month to 3 year perspective.
So I think so far, Trent, you're asking more overall to the company or is it specifically in 5 gs?
No, overall, yes.
Yes. So from an overall perspective, as I had mentioned, if you look at the last two quarters' trend, we're in the range Average at around 800 odd 1,000,000. Add together, we did 15.50, which is significant the run up to our previous average that you've been seeing, which is around 4.50 to 500, right? So hence, it's almost a 50% jump to that number. As we look at, I would say pipeline, the deal flows, the closures and as you rightly mentioned, kind of the lumpiness exists in terms of closing of contracts, etcetera.
So there might be some up and down though these two quarters are pretty close to each other. The Yes, I think from a trend perspective, I would say annualized basis versus if you look at the trend of the number we had previously, we should see a similar increase on a baseline perspective from an annual basis, Right. So I think that's the way looking at a new baseline in our mindset.
The So when you're saying that, are you trying to refer that a 20%, let's say, the growth on a TTM basis normalized for some very big deal. Is the number one should watch out for or the absolute
the $2,530,000,000
kind of a 4 quarter bucket is what you are attending.
Yes, I think the second, the latter one. That's kind of the better way to look at it right now.
So on a $6,000,000,000 kind of a current run rate, if we do $2,530,000,000 which is like 40%, 50% of the current size is
the What
shall we be the way
to present it? Yes. So the way you look at our deal wins is we're doing only incremental the deal win announcement, right? And this is greater than $5,000,000 incremental and some of the way peers announced is different. So as a percentage of revenue, the Maybe that's on the correlation that you can drive from a book to bill perspective, right?
But if
you just look
at our perspective, While the 3 versus whatever the number you correlate to as I annualize revenue, it will be a different percentage. So there's no apple to apple comparison that you would find, right? This is purely incremental, more than R5 1,000,000, which is what we're including, and you have to look at a trend from a quarter over quarter growth perspective as you move forward.
Right, right. So of course, from the leaking revenue as well as sub $5,000,000 adjusted for that, this is what one should look at it.
Yes, yes, that's right.
Fair enough. Fair enough. Thank you. Thanks for the color.
Thank you. Ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. Rohit Anand for closing comments.
Over to you, sir.
The Thank you. Thanks everybody for joining for our call today. I'd like to, first of all, the Wish everybody a very happy and a safe Diwali to you and your families. I'll also I repeat what CP mentioned. Look forward for all of you to join us for our Investor Analyst Meet on the 11th November, either physically or virtually.
Look forward to that participation that I can share more of the TechEm growth story with all of you. So that's another the event that is coming forward from the company standpoint. So with that, thanks again and thanks for your team.
Thank you. Thank you.
Thank you everybody. Thank you so much.
Thank you. On behalf of Tech Mahindra Limited. We conclude today's conference. Thank you all for joining. You may now disconnect your lines.