Tech Mah wins $350m outsourcing deal from BT

Tech Mahindra has won a five-year outsourcing deal worth USD 350 million plus from BT, reports CNBC-TV18.

Clive Selley, MD, BT Worldwide Business said the payments will be made evenly in five years. He told CNBC-TV18 that Tech Mahindra will need to increase head count to execute the deal.

Excerpts from CNBC-TV18’s exclusive interview with Clive Selley:

Q: Could you give us more details about this deal, the duration over which it would be implemented and the kind of offshore-onsite mix that you would like in terms of headcount?

A: The deal size is around USD 350 million. The duration is five years. It is essentially for application support and maintenance. It is for a very large portion of the BT IT-estate, supporting each of our major lines of business, our retail, wholesale and global services businesses.

For us, it is a landmark deal. It involves a reaffirmation of our commitment to working hand in glove with Tech Mahindra, who have proved themselves to be a highly dependable major IT partner over the last few years. We are now committing a very large-scale deal over a period of five years.

Q: How will the payment be done? We are given to understand that there might probably be an equity element? How different would this deal be from the USD 1 billion five-year deal that you signed with Tech Mahindra?

A: The deal is for very different work. The USD 1 billion deal that Tech Mahindra signed with BT Global Services was about assisting us in delivering major global customer deals and delivering the IT elements of those deals.

This new USD 350 million deal is all about application support and maintenance. The payment profile for this would be fairly even, across the period of five years involved.

Q: In terms of the headcount required for executing this deal, are you looking at a particular number? Are you adequately employed for the implementation of this deal? Would you be looking at ramping up the headcount?

A: You will find that Tech Mahindra will ramp-up the headcount involved to support the deal. They already have a very large workforce of personnel that are highly skilled in many of the areas covered by this deal.

But I suspect that they will augment that headcount, in order to meet the new scale that they are undertaking. So, for them, this is a lot of incremental work. I would imagine that they will be taking on more people, to develop a greater capacity to execute a deal of this size.

Q: Given that you are one of the key clients for Tech Mahindra, how do you foresee the onsite-offshore mix going about, for all the deals being executed by Tech Mahindra? There have been a lot of reports suggesting that you are now looking at ramping up the offshore presence of employees and getting employees back from the UK.

A: It is our intention to leverage the strength of India and the massive talent pool that exists in India. Increasingly, we are very comfortable that the work that is executed, on behalf of BT, is actually done from India rather than locally in UK.

Over time, you will see that on very major engagements, a very large portion of human resources will be located in centres of excellence in India.

For this application support maintenance deal, Tech Mahindra is creating a new center of excellence in the UK. So, there will be some onshore presence for certain. But the bulk of the engineering personnel will be located in Tech Mahindra centres across India.


Source : MoneyControl