EBIT Up 360 Basis Points Without Volume Recovery: The Six Levers Behind Project Fortius
Rebounded PAT 80.3% to INR 4,252 crore in FY2025 through Project Fortius restructuring.
Tech Mahindra, a Large Enterprise IT Services & Consulting company, created value through R&D Efficiency.
Tech Mahindra, India's fifth-largest IT services company, entered fiscal year 2024 (April 2023 – March 2024) in acute financial distress. Revenue declined 5.0% to $6.277 billion from $6.607 billion in FY2023. EBITDA margin contracted sharply from 15.1% (FY2023) to 9.6% (FY2024) — a 550-basis-point collapse. PAT fell 51.2% from ₹4,832 crore (FY2023) to ₹2,358 crore (FY2024). The deterioration stemmed from multiple factors: an industry-wide demand slowdown, over-reliance on expensive third-party subcontractors, an over-lateral-heavy talent pyramid distorted by aggressive hiring in FY2022–FY2023, and poor employee utilization as headcount outpaced demand. Headcount peaked at 152,400 in FY2023 and fell to 145,455 by FY2024 (a reduction of ~6,945 employees). Mohit Joshi became CEO in November 2023 with a mandate to structurally restore margins without sacrificing competitive positioning.
In April 2024, Tech Mahindra unveiled its "Vision 2027" strategic roadmap and its accompanying operational turnaround initiative, "Project Fortius," targeting 15% EBIT margin by FY2027. Six specific operational levers were disclosed in investor communications:
Project Fortius delivered measurable margin recovery within the first year of execution:
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | $6.607B | $6.277B (-5.0%) | $6.264B |
| EBITDA margin | 15.1% | 9.6% (-550 bps) | — |
| EBIT margin | — | ~6% | ~9.7% (+360 bps) |
| PAT | ₹4,832 cr | ₹2,358 cr (-51%) | ₹4,252 cr (+80%) |
| Headcount | 152,400 | 145,455 | 148,731 |
| Utilization excl. trainees | — | 86% (Q4 FY2024) | — |
| New deal TCV | — | — | $2.7B (+42% YoY) |
| Largest single deal | — | — | Telefonica O2 Germany: $500M+ (5 yr) |
| Employees trained in AI/GenAI | — | — | 80,000+ |
Tech Mahindra's FY2024 collapse — EBITDA margin from 15.1% to 9.6%, PAT down 51% — wasn't caused solely by the industry demand slowdown, though that triggered it. The damage magnitude reflected structural exposure: a talent pyramid distorted by aggressive lateral hiring in FY2022–FY2023, heavy reliance on expensive subcontractors, and headcount sized for demand that had evaporated. Project Fortius named six levers: fresher hiring to rebalance the pyramid, subcontractor replacement with internal capacity, offshore mix improvement, utilization recovery (86% excl. trainees by Q4 FY2024), delivery model centralization, and AI upskilling at scale across 80,000+ employees. Each targeted a specific cost element rather than a blunt headcount reduction.
The FY2025 outcome validates that the levers were correctly identified. Revenue was essentially flat (-0.2%) while EBIT expanded 360 basis points — the signature of cost restructuring working on its own terms rather than a volume rebound. The Telefonica O2 deal at $500M+ and TCV up 42% confirm that the restructuring didn't impair deal competitiveness; the AI upskilling that improved internal delivery efficiency simultaneously positioned the firm for AI-linked wins externally. The Vision 2027 target of 15% EBIT margin implies roughly 530 more basis points from the current ~9.7% — the cost discipline is established, but the remaining gap depends on mix shift and deal scale.
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