Tech Mahindra will not bid for new e-governance projects

Adith Charlie Mumbai | Updated on January 24, 2018 Published on February 03, 2015

CP Gurnani, Managing Director and Chief Executive Officer, Tech Mahindra,

Wary of government’s procurement process, delayed payments, contract terms

Tech Mahindra does not seem to share the optimism evinced by some of its peers in working with Indian government agencies for IT projects. The company will not bid for fresh e-governance projects until government agencies streamline their procurement process, ensure timely delivery of payments and design mutually acceptable contract terms, according to CP Gurnani, Managing Director and Chief Executive Officer.

“We will stay away from e-governance projects as many of these deals are one sided, with onerous terms of engagement that disfavour the vendor,” Gurnani said.

However, the company continues to provide services to the Indian private sector, a line of business which is expected to grow further.

Top officials of companies such as Tata Consultancy Services, Wipro and others have been giving positive commentary on the India business thanks to overall buoyancy in the market coupled with the Centre’s push on delivering effective governance through technology. Prime Minister Narendra Modi’s focus on ‘Digital India’, ‘Make in India’ and ‘100 smart cities’ also appear to have added to the optimism. While Tech Mahindra expects government spending to substantially increase, it wants these deals to more viable for participating vendors. “Some of my counterparts in other firms say that the ‘debtor days’ in Business-to-Government contracts are about 200 days while it is 70 days in business-to-business contracts. Hence, we have chosen to look at B2B (with Indian companies) IT projects only,” Gurnani said in an interview recently. The ‘debtor days’ matrix measures how quickly cash is being collected from clients — the longer it takes for a company to collect, more the number of days.

Hit by delays

While most Indian software providers operate at over 20 per cent profit margin in large markets such as the US and Europe, they say profit margins in India fall in the single digits due to late payments and delays. It may be recalled that Tech Mahindra had in 2013 suspended IT services to three websites of the Municipal Corporation of Delhi for alleged non-payment of dues to the tune of over ₹100 crore for a three-year period.

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Published on February 03, 2015
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