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

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.

Of the planned capex, 60 percent would be invested in physical infrastructure such as buildings and real estate while the remaining 40 percent would be invested in enhancing technology.

New development centers would come up in Pune, Kolkata, Chandigarh and Noida, Tech Mahindra said. Campuses are also in the process of being set up in Belfast (Ireland) and Milton Keynes (UK), it added.