BANGALORE: Tech Mahindra has won around $500 million outsourcing contract from new telecom entrant Swan Telecom.

Swan’s outsourcing contract, which witnessed aggressive bidding from IBM, Wipro and Tech Mahindra, comes at a time when Tech Mahindra is attempting to establish itself in the domestic market, as part of its long term strategy to derisk its revenues from BT.

A letter of Intent (LoI) was issued to Tech Mahindra around two weeks ago, a person involved with the contract told ET on conditions of anonymity. “The contract is to be delivered over ten years and it is a total IT outsourcing,” he added. He requested anonymity because he is not authorised to speak about this contract.

Officials from Emirates Telecommunications, or Etisalat also participated in the decision making, the person added. Etisalat had acquired 45% stake in Swan for $900 million last year.

“Etisalat has adopted this strategy of bundling IT with network equipment contract in most of its greenfield projects, and India is no exception,” another person familiar with Etisalat’s outsourcing strategy told ET on conditions of anonymity. For instance, outsourcing contract for Etisalat’s greenfield project in Egypt, Nigeria and Tanzania were structured in a similar fashion. In fact, Tech Mahindra alongwith Ericsson won Etisalat’s Egypt contract in February last year.

Wipro, which won Rs 2500 crore outsourcing contract from another new entrant Unitech Wireless few months ago, was also in the shortlist, but Swan decided to opt for bundling its IT and network management, equipment contract in order to avoid additional upfront costs.

source: Economictimes

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