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12/21/2006
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Largest Indian Outsourcing Deal Ever: Tech Mahindra Wins $1 Billion Pact From BT

The deal is the latest indication that Western businesses now view India's low-cost outsourcers as viable alternatives to global giants like IBM and EDS for comprehensive services engagements.

India's Tech Mahindra has received the largest outsourcing contract awarded to a single offshore services company to date, securing a five-year, $1 billion deal to provide tech support to British Telecom and its business customers.

Under the agreement, Tech Mahindra will provide BT with internal IT support and will also act as a third-party contractor on some of BT's managed services accounts with business customers. Tech Mahindra said it plans to hire 3,000 to 4,000 employees over the life of the contract to help with the work.

BT owns a 35% stake in Tech Mahindra, which filed an initial public offering earlier this year. Tech Mahindra's shares on the Bombay exchange jumped 20% to 1,492 Indian rupees, or $33.44, on the news by the close of trading Thursday.

The deal is the latest indication that Western businesses now view India's low-cost outsourcers as viable alternatives to global giants like IBM and EDS for comprehensive services engagements. In July, European financial services firm Skandia handed India's HCL Technologies a deal worth $780 million, and last year ABN Amro tapped a five-vendor team of outsourcers that included India's TCS, Patni, and Infosys for a $2.2 billion contract.

Tech Mahindra has worked with BT for the past 20 years. In a statement, Tech Mahindra managing director Vineet Nayyar said the latest deal "takes our long standing relationship to a new level." The company also provides support services for U.S. telecom giant AT&T.

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