Tech Mahindra-Mahindra Satyam combine may be major IT player

The merger entity of Tech Mahindra and Mahindra Satyam may emerge as a formidable competitive force in the Asia-Pacific region, especially for Indian IT service providers and other regional players, according to International Data Corporation (IDC).

IDC, a premier global provider of market intelligence and advisory services, further said the joint go-to-market initiatives between Tech Mahindra and Mahindra Satyam as the foundation for future integration proved to be a success model that clinched 10 new clients for Mahindra Satyam last year.

"A combined revenue base in excess of $2 billion with approximately 20% coming from emerging markets (Asia-Pacific, Africa and the Middle East) will give the merged entity a strong growth story," the report said.

The IDC Insight is based on presentations and discussions at a Mahindra Satyam analyst meet held on July 8.

"In addition, the merged entity will have a well-balanced split in revenue from the United States and European markets where its immediate competitors (i.E. Indian IT players) have found it difficult to maintain the balance," IDC said in its latest report.

Commenting on margins, the report said in order to maintain margin levels, it will be essential to leverage Mahindra Satyam's intellectual property and product delivery model.

Potentially, the next stage of consolidation after the Mahindra Satyam and Tech Mahindra merger would be to bring Mahindra's business process outsourcing (BPO) services into the fold to build up the scale of its operations in domestic and global markets.

The joint initiative resulted in 10 new wins for Mahindra Satyam over the past year, including a transformation services deal for a telecom operator in Australia, transportation management solution for a major telecom operator in the United States, customer analytics for a major Canadian telecom operator and a cost reduction as well as compliance solution based on Oracle for GE-Energy.

"Going forward, the two companies have identified 20 telecom accounts for further focus across operational and billing support systems (O/B SS), decision support systems (DSS) and extended EBS," the IDC report said

"In the EBS space, focus areas will include business analytics, point of sale (POS) solutions for telecom retail stores and property management for telecom operators," it added.

IDC also opined that in order to make the joint initiatives taken up by Tech Mahindra and Mahindra Satyam -- which it dubbed the 'M-Cube Advantage' -- work, it will be crucial to take the ongoing integration of Mahindra Satyam and Tech Mahindra to its logical conclusion.

At the customer panel in the analysts meet, representatives from leading corporates spoke highly of their experience with Mahindra Satyam and their commitment to continue further their relationship, IDC said in its report.