The Hindu Business Line : Diversification for Tech Mahindra

Tech Mahindra’s deal win with Telecom New Zealand (Telecom NZ) may help diversify its revenue base, by adding to revenues from non-British Telecom clients.

That the deal does not involve any transfer of employees from Telecom NZ is another positive takeaway.

Revenue Visibility

The $24 million, 18-month deal envisages, Tech Mahindra providing complete system integration services to Telecom NZ’s retail business.

This deal involves services to be delivered for the client’s next-generation telecom initiative signifying a move up the value chain for Tech Mahindra.

With Telecom NZ reportedly planning a NZ $1 billion a year capex expansion, Tech Mahindra appears well-placed to tap into any new opportunity.

There would be no transfer of employees from Telecom NZ to Tech Mahindra, as normally happens with large deals.

This means that there would be lower burden in terms of manpower costs and the company could work in a non-captive mode. For Tech Mahindra, this deal also helps reduce dependence on BT (its largest client contributing over 60 per cent of its revenues) related deals.

Geographic Diversification

New Zealand/Australia, two under-tapped geographies, represent yet another diversification opportunity for Indian IT companies, in the Asia Pacific region.

HCL Technologies recent large deal win Fonterra of New Zealand is a case in point.

This may set a new course for these companies that are dependent on the US and Europe and help diversification.

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