Tech Mahindra to Bill Separately for Digital Workforces

Tech Mahindra is pioneering a fundamental shift in the IT services industry by moving toward a “dual-pricing” model that distinguishes between human effort and digital labor.

CEO Mohit Joshi announced that the company aims to decouple its revenue from traditional headcount-based billing, reflecting the transformative impact of Generative AI on software development and maintenance.

Tech Mahindra Moving Beyond the Billable Hour

Historically, the Indian IT sector has relied on “time and materials” contracts, where companies directly link revenue to the number of hours employees work.

However, as AI tools significantly accelerate coding and testing processes, Tech Mahindra argues that this legacy model penalizes efficiency.

By introducing a separate pricing structure for digital labor, the company intends to charge clients based on the value and output generated by AI agents rather than just human hours.

The Mechanics of Digital Labor Pricing

Under the proposed framework, Tech Mahindra will categorize work into two distinct streams.

Human labor will continue to be billed for complex advisory, creative, and strategic roles.

Meanwhile, “digital labor”—comprising automated workflows, AI-driven code generation, and bot-led support—will likely move toward “outcome-based” or “subscription-based” pricing.

This allows the firm to capture the productivity gains of AI as profit instead of passing all savings to the client, a shift Mohit deems essential for maintaining margins in an automated era.

Reskilling and Strategic Realignment

To support this new commercial model, Tech Mahindra is aggressively reskilling its workforce.

The company has integrated AI training into its “Project Indus” initiative, focusing on high-level architecture and AI orchestration.

This strategy ensures that human employees transition into “AI managers,” overseeing the digital labor force.

This transition is also a response to the “efficiency paradox,” where AI completes tasks so quickly that traditional billing would otherwise lead to revenue shrinkage.

Tech Mahindra’s move is being closely watched by global rivals.

If successful, it could trigger a wider industry shift toward “Value-Based Billing,” effectively ending the decades-old dominance of the per-hour revenue model.

Analysts suggest this is a necessary survival tactic as enterprises demand higher efficiency at lower costs.

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