Tech Mahindra bags $250 million multi-year system consolidation contract

According to Rajesh Chandiramani, marketing head, Tech Mahindra, 700 people would be engaged in the project.

"As an organization we are committed to signing large deals. The strategy is to engage in contracts of longer periods," Chandiramani said, noting the current volatility in global financial markets.

"One of the major telecom players is consolidating its vendors and its systems and Tech Mahindra is taking over the responsibility of consolidating some of the processes and handling it over the years," said C.P. Gurnani, president (international operations), Tech Mahindra.

"Through this order which spans for five years, Tech Mahindra will provide all the managed services as well as the systems consolidation job for the US telecom company," he said.

Though Tech Mahindra has refused to name its client, a source close to the deal said it is the company's existing client, AT&T.

Tech Mahindra, a joint venture between India's automobile company Mahindra & Mahindra and the UK's BT Group,is lagging behind market leader Tata Consultancy Services, and rivals Infosys Technologies, Wipro, Satyam Computer Services and HCL Technologies in IT software and services space. The Indian IT/ITeS companies, which depend a lot on the US clients for major portion of their revenues, have been witnessing slow demand due to global; economic downturn triggered by subprime credit crisis.

Facing slowdown of demand in the US market, the Indian IT companies have begun looking elsewhere to spur their revenue growth. However, North America (including the US) contributes about 20 percent to Tech Mahindra's revenue, while over 70 percent comes from Europe, with the UK's BT Group Plc, being its largest client. In July, Tech Mahindra announced a 5-year, $700 million deal from BT Group in addition to an ongoing engagement for a $1 billion contract with BT Global Services and a third $350 million deal from BT for application support.

Earlier this week, the company said it has won a smaller, 3-year deal from a Kuwait-based telecom firm for about $10-15 million for providing system integration support. It also won deals from Telecom Fiji, and a $20 million deal from Telecom New Zealand among others.

In a separate development, the firm said it has outlined a capital expenditure (capex) plan of $150 million for the next 3 years.