Tech Mahindra bags $700 mn deal from British Telecom

NEW DELHI: Tech Mahindra, the sixth largest IT exporter, has bagged a $700-million contract from British Telecom (BT) for transforming and improving BT���s IT estate or infrastructure. This is one of the largest contracts that any IT company has won in recent months. It also gives boost to Indian IT at a time when the US subprime crisis and talks of slowdown had dogged IT services companies.

For Tech Mahindra, the $700 million contract is the third big engagement that the telecom services major has bagged from BT. Earlier, Tech Mahindra had won a $350-million contract and a $1 billion IT outsourcing deal from BT.

When contacted, Tech Mahindra president for international operations CP Gurnani said, ���At any given time, we are chasing big deals and long-term contracts, but this is purely speculative.��� The company is due to announce its annual results on May 19 and refused further comments on BT contract, citing silent period requirements. Tech Mahindra���s share closed at Rs 933.45, marginally up from its previous day���s close.

BT is Tech Mahindra���s largest client. Its second largest client is American telecom major AT&T, while Motorola and Alcatel-Lucent are part of the software exporter���s top five clients. BT accounts for little under 60% of the total business with Tech Mahindra. When asked about client concentration risk, Mr Gurnani said, ���Over the years, BT business has declined from 90% to less than 60%. We have a large portfolio and we don���t look at it as a client concentration risk. Instead, it���s a vote of confidence from BT.������

About 70% of Tech Mahindra���s business comes from Europe and 20% from the US. ``We have grown the US business in the last few years. Despite the recent crisis, US will remain the biggest trade partner for IT services companies,������ Mr Gurnani said.

Recently, Tech Mahindra also expanded its mobile virtual network operator (MVNO) client base by entering into IT partnership with FRiENDi mobile, the MVNO in the Middle East and North Africa. Tech Mahindra will implement FRiENDi���s mobile���s ERP, business process automation, reporting and web self care systems, as well as community-based applications and value-added services.

Tech Mahindra broadly caters to three kinds of customers���telecom service providers, independent software vendors and telecom equipment makers. The company is working with clients on Internet technologies to cover delivery platforms such as Wi-Fi and WiMax. T

hese three segments, along with associated IT and BPO services, cover the entire span of IT operations for telecom companies. This makes Tech Mahindra a fully-integrated player, providing it with a significant competitive advantage for IT related outsourcing business tasks in the telecom space.