Global call

Mumbai, Dec. 20: In one of the largest outsourcing contracts for an Indian company, Tech Mahindra has entered into a $1-billion deal with BT Group Plc.

Tech Mahindra will cater to BT’s global customers in the managed services space for five years. The service network will be managed out of India by Tech Mahindra.

In a late evening announcement, Tech Mahindra added that it would continue with the ongoing services to BT.

“This contract is expected to create new revenue for Tech Mahindra in excess of $1 billion over this (five years) period,” the company added.

Observers of the IT industry say this is perhaps the largest outsourcing deal offered to an Indian company.

In September last year, Dutch banking major ABN Amro signed up with three Indian companies, Tata Consultancy Services (TCS), Infosys Technologies and Patni Computers, and US firms IBM and Accenture for five years to manage and develop its systems.

However, the lion’s share of the $2.2-billion contract went to IBM which was assigned the task of managing ABN Amro’s IT infrastructure. TCS and Infosys were chosen to give application support.

BT said it would work with Tech Mahindra to create a superior global delivery platform for its clients by augmenting the capabilities of the Indian company’s delivery centres. BT holds 32.55 per cent in Tech Mahindra and M&M 46.41 per cent.

BT, therefore, will gain from the deal that will add Rs 800 crore to the topline of Tech Mahindra in this fiscal.

Tech Mahindra has ramped up its headcount in the past one year to win more clients and reduce the dependence on BT which to analysts has always been an Achilles heel of the company.

“Our manpower strength has risen by more than 73 per cent and it now stands at over 18,000. This is an indication of how the company has been growing,” a Tech Mahindra official said.

Hanif Lalani, BT’s group finance director, said: “This is another example of BT sourcing the best skills around the world to deliver outstanding service.”

Vineet Nayyar, vicechairman and MD, Tech Mahindra, said: “We are proud to be BT's preferred partner for its internal IT requirements and this new opportunity will enable us to assist BT serve their external customers even more effectively.”