Mahindra, the technology services arm of the Mahindra
group, has won the first ever $1-billion outsourcing order
by an Indian company. The Pune-based company has achieved
what the large Indian IT services companies have been
unable to do so far.
order is a further confirmation that Indian companies
have the capability to win large outsourcing deals, which
regularly went to global companies like IBM, Accenture
and EDS till last year.
now, the single largest outsourcing deal by an Indian
company was the $850-million deal by TCS with UK-based
Pearl Group. HCL Technologies had earlier won a $200-million
order from Skandia and a $330-million deal from DSG group.
TCS, Infosys and Patni had won parts of a large outsourcing
order from ABN Amro.
5-year order is from UK-based $36-billion telecom major
British Telecom (BT) for providing internal IT support
and managing BT''s managed services accounts with business
customers. Tech Mahindra will support BT''s planned growth
of managed services to business customers around the globe
and continue to provide ongoing services related to BT''''s
internal systems, processes and re-usable platforms. Tech
Mahindra may hire up to 4,000 employees over the contract
period to execute the order.
the flip side, the order increases Tech Mahindra''s dependence
on BT. The dependence was as high as 83 per cent of total
revenues during the first quarter of 04-05, but was brought
down to 64 per cent for the quarter ended 30 September,
percentage would rise again in the coming quarters as
the company starts work under the order. During the last
reporting quarter, top-5 clients contributed 82 per cent
of revenues while top-10 clients contributed 90 per cent
BT was one of the co-promoters of Tech Mahindra, earlier
known as Mahindra BT. As on 30 September, 2006, BT held
a 32.55 per cent stake in the company, auto major Mahindra
& Mahindra owned 46.41 per cent while a group company
held 8.57 per cent.
Mahindra expects overall revenues to increase between
20 to 25 per cent during the first year, from the order.
However, overall margins would be under pressure during
the first year. Both companies will work together on creating
and operating a global delivery organisation, by leveraging
and augmenting Tech Mahindra''s existing delivery centres
to achieve greater flexibility and efficiencies in addressing
client requirements, according to a statement issued by
is another example of BT sourcing the best skills around
the world to deliver outstanding service and value for
our customers whilst contributing further to continued
operational efficiencies", said Hanif Lalani, BT''s
group finance director.
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. We feel privileged that BT has selected us
for this opportunity and takes our long standing relationship
to a new level", Vineet Nayyar, vice chairman and
managing director of Tech Mahindra said.
Mahindra''s IPO was subscribed over 70 times and is one
of the best performing IPOs this year. Issued at Rs365
in August this year, the stock has surged to over Rs1,600
now. After a very good listing, the initial surge was
after the company announced second quarter results, which
were way above expectations. From around Rs600
levels, the stock price nearly doubled within a couple
of weeks. The new order has led to a fresh upsurge and
the stock has gained more than 30 per cent over the last
2 sessions to a new lifetime high.