India's "Financial Express" reports that Indian IT outsourcing firm Tech Mahindra Ltd. (BSE: 532755) is the latest newcomer from India to Israel. The paper said that the company has won a contract worth $500,000 to develop and integrate an IT project at Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR; LSE:PCCD). The "Financial Express" quotes a manager at Tech Mahindra, who explained why the company considers the entry to Israel a strategic move. Tech Mahindra is apparently planning an aggressive penetration of the Israeli market, which will include the opening of an R&D center and several acquisitions over the longer-term.
Tech Mahindra is one of the more interesting companies on the Indian IT market. Founded 20 years ago as a partnership between Indian conglomerate Mahindra & Mahindra (M&M) and UK telecom carrier BT Group, it is now traded on the Bombay Stock Exchange at a market cap of $3.4 billion. M&M now holds a 44% stake in Tech Mahindra while BT owns 31%. Following a raft of acquisitions in recent years, Tech Mahindra is now considered India's sixth largest IT outsourcing company after giants such as Infosys (Nasdaq: IFNY; BSE: 500209) and Tata Infotech Ltd (BSE: 504290).
Tech Mahindra's plans for Israel will focus initially on the telecommunications market, the field it has traditionally specialized in since it was founded. "We are in talks with other telecom players as well like Bezeq Telecom and would also like to do business with some interesting gaming companies," Tech Mahindra VP & managing director Vikram Nair told the "Financial Express." "We are expecting revenue of about $5-10 million in the next 1-2 years and about $10-15 million in 3-5 years from our Israel operations,” he added.
However, the company appears to have even bigger plans. "In Israel, as we grow our customer reach, it will make sense on a long term basis to look for a development centre,” said Tech Mahindra general manager sales and marketing Rajesh Chandiramani in an interview with online news site "Livemint." Chandiramani also commented in the article on the company's plans to expand into Scandinavia, but stressed that because of language issues it would be looking primarily to acquire local companies. "Livemint" said that Tech Mahindra was looking for "an acquisition in the telecommunication sector to acquire more expertise in product engineering, application development, or IT. While the company has already been building a client base in Scandinavian countries for over two years, it has started acquiring clients in Israel only in the past four months."
Published by Globes [online], Israel business news - www.globes.co.il - on January 1, 2008
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