Tech Mahindra sharpens focus on West Asia, Africa

In talks with a few African telcom companies for large contracts.

Tech Mahindra, the information technology (IT) services provider to telecom sector, is focussing more on the Middle East and African (MEA) market. It is also in talks with three-four African telecom companies for large contracts.

“We are in talks with telco players in the African region for outsourcing contract, one of them could be around $500 million,” said Krishna Gopal, vice-president - MEA-Saarc (sales) and global alliances of Tech Mahindra.

The MEA telecom market is undergoing a lot of changes. Analysts are of the view that though the market is growing fast, many countries in Africa are under-penetrated and have huge opportunities for IT services providers. According to Gopal, though the market is growing, it still remains fragmented.

“We hope the Bharti-Zain deal will change the market, but otherwise the business from this region is very lumpy and the deal sizes signed are smaller than the global trends and also for a shorter period. The deals range between three to nine months and a large deal would be around $15-20 million. Besides it is fragmented. If you look at the MEA telecom market, according to a Gartner study, it is a $2-billion services opportunity. Of this, over 40 per cent is captured by telecom equipment providers and the rest is divided among several smaller players. Each of these players have a turnover in the range of $10-12 million,” he said.

To get across these hurdles, Tech Mahindra has changed its strategy over the last six months. “Close to 90-95 per cent of our revenue from this market comes from systems integration (SI) and consulting work. But we now plan to increase our service bouquet. We have increased our service offerings by introducing infrastructure management services (IMS), BPO, value-added services (VAS) through CanvasM, security and network,” said Gopal. Tech Mahindra is also planning a BPO centre in the region for African and ME customers.

For Tech Mahindra, rest of the world category, including the MEA, contributed 12 per cent to its revenue for 2009-10. Last year, business from this region almost doubled.

With over 10 customers, Tech Mahindra has implemented 14-15 greenfield projects in the MEA telecom sector and worked with telcos like Zain, Etisalat, Qtel, among others.

“We entered the MEA market way back in 2000-2001. But as telcos start focusing on cost savings, they will see the merit in long-term contracts. We have already seen traction in our security and networking segments,” said Gopal. He said the company was in talks with one-two telcos for its BPO services as well.

Other than having presence in Dubai, Bahrain, Nigeria, Johannesburg, Muscat and Riyadh, the company is also putting specialist people to offer its new services. “We have announced three important appointments to increase our customer focus. Other than Hassan Albrazi for Saudi Arabia market, we have two others who will take care of the Middle East and the African markets,” said Gopal.