BT to reduce IT budget, aims at vendor efficiency

UK-based telecom giant BT (ex-British Telecom) is planning to reduce its information technology budget this year, aiming at vendor rationalisation and increasing its efficiencies, said sources.

BT is a large client for Indian IT service companies Infosys and Tech Mahindra and some business process outsourcing firms.

“All global companies are looking at bringing in efficiencies and optimising costs across functions. BT, too, is looking at such a process. While not looking at a price cut, it is looking at tier-II IT firms for work. The cut could be in the range of 15 per cent,” said a source close to the development.

When asked, BT declined to comment. It had outsourced about £800-900 million (Rs 580-650 crore) worth of work to its Indian IT partners last year. Almost 70 per cent of the work that BT outsources comes to India.

Industry analysts are not surprised by the move. “BT has been under pressure; their business has been shrinking. Besides, Europe is yet to come out of trouble. But having said this, I think Indian IT services firms might not get impacted, as they will look more at offshoring,” said an analyst of a leading research firm, on condition of anonymity.

BT is the largest client of Tech Mahindra, contributing over half its revenue. The company has restructured its deal with BT over the past few quarters.