TechM bets on Satyam for BPO gains

Tech Mahindra is banking on subsidiary Mahindra Satyam’s strengths for its BPO business to take off.

Earlier this month, Tech Mahindra inaugurated a 1,000-seat BPO in Chandigarh in addition to existing centres in Kolkata, Noida, Pune and Chennai and two overseas centres in Belfast and New Castle. 

Most of Tech Mahindra’s clients are in the telecom space and many of these clients are deploying business applications such as enterprise resource planning (ERP) and business intelligence (BI).

“At Tech Mahindra, a lot of investments are going in BPO services, especially in the reconciliation and settlement processes. Since these are connected to a firm’s ERP and BI applications, Satyam’s ERP capabilities are going to be very useful,” Atul Kanwar, president, European Union, Africa, Middle East, APAC and India markets for Mahindra Satyam said.

“We have seen significant traction recently as far as number of customer wins for Mahindra Satyam from the existing customer base of Tech Mahindra is concerned. But I cannot give you the exact number for confidentiality reasons,” Kanwar added.

Tech Mahindra, which has around 400 clients, has lately been faced with revenue side worries in the last few quarters, with the share of business from British Telecom (BT), which contributes nearly 39% of its revenues, declining.

“Tech Mahindra saw a marginal decline from the core BT account during the quarter (Q1 FY10). However, the management is not confident on the quantum of downside from this account. They also indicated high pricing pressures from this account,” Nitin Padmanabhan, an analyst at broking firm Centrum Research, wrote in a note to clients dated July 24.

Tech Mahindra acquired the scam-hit Satyam Computer Services in April this year and subsequently renamed it as Mahindra Satyam. In a bid to realise the synergies, the companies announced a restructuring in June.

As part of the scheme, Kanwar, who was the chief business development officer at Tech Mahindra till then, was moved to Mahindra Satyam, while TR Anand, earlier a Satyam executive, was asked to head business development and operations for the telecom, media & entertainment, tech infra and semiconductor verticals in addition to channel business through alliance partners, and Tech Mahindra and new technology companies.

Meanwhile, Tech Mahindra has reportedly bagged a IT outsourcing contract worth Rs 900 crore from Etisalat DB Telecom India (Swan Telecom) for providing customer billing solutions.

For the quarter ended June, Tech Mahindra reported a 6% growth in topline to Rs 1,100 crore. But profit fell 43% to Rs 130 crore, 23% lower than analyst estimates, on the back of forex losses of Rs 26 crore and a write-off of Rs 8.5 crore.