Tech Mahindra warns of further erosion in BT business

There may be further erosion in business from BT Group Plc, the UK telecommunications giant, Tech Mahindra told analysts during a late-evening earnings call on Friday.

Owing to ‘significant portions’ of services — where TechMa is a service provider — being ‘re-tendered’, inviting participation from other vendors, there is ‘uncertainty’ in the quantum of future business from BT, Pune-headquartered firm’s chief financial officer Sanjoy Anand said.

BT is the largest client for the firm, contributing 40% of its Rs5,140 crore revenues in the year ended March 31.

That’s significantly lower than the 52% revenue contributed by the company just two years ago.

Exactly a year back, TechMa’s chief executive Sanjai Kalra, who was instrumental in managing the firm’s relationship with BT, resigned.

In that period, as BT went through financial turbulence, it undertook a series of re-negotiations with service providers such as TechMa to secure price reductions.

A couple of quarters ago, following multiple-rounds of price reductions from BT contracts, the TechMa management had said it had managed to get business volume commitments from BT.

Then, Tech Mahindra told analysts it expected to receive $70-72 million worth business from BT every quarter. With the latest development, that guarantee comes under a shadow.