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How TechM may change Indian IT

April 23rd, 2009

NEW DELHI: With Vineet Nayyar, CP Gurnani, Sanjay Kalra and Ulhas Yargop joining the Satyam board, the stage is now set for a battle of strategi
es between India’s top IT five firms. Competitors may well have to contend with a far more aggressive player in the emerging Tech Mahindra-Satyam combine. Nayyar, Gurnani and Kalra are all former HCL group executives—an entity that is known for its aggressive growth strategy.

Already the trio, who form a key part of the executive management team at Tech Mahindra, have shown themselves to be fairly aggressive. In 2006, Tech Mahindra won a $1 billion deal from British Telecom (BT) by making an upfront payment of $110 million. The deal was then considered as a pathbreaker and helped Tech Mahindra pip Patni Computer and i-flex Solutions (now Oracle Financial Services) to become the country’s sixth largest IT exporter.

“Tech Mahindra is one of the success stories of the last five years. This team was brought in from HCL before Tech Mahindra’s IPO in August 2006,” said an analyst tracking the sector. Tech Mahindra’s revenues have grown from $210 million in FY05 to over $900 million in FY08. Much of this has come from BT which holds a 31% stake in the company. This is different from the 80s and early 90s when most of BT’s work was done by Mahindra BT as Tech Mahindra was then called. BT now has other partners such as Infosys, as well as its own captive in India.

“So far, Satyam was known as a low-cost player but that might change. We may see a few changes…. they (Tech Mahindra) might like to be more aggressive and win deals based on value-proposition rather than just on a price proposition,” said Alok Shende, principal analyst, Acsendia Consulting. According to him, among the top five IT firms, Tata Consultancy Services (TCS) is very process-driven, while HCL Technologies has more an entrepreneurial culture at the top.

“Satyam was also more of a process-driven company. We will now see a company that is not just process-driven but also entrepreneurial,” he said. Peers such as Infosys Technologies also expect to see stronger competition from Satyam. “I have to believe that together they will be stronger than before,” said Ashok Vemuri, head, banking and capital markets, Infosys Technologies.

According to lore, Nayyar who joined Tech Mahindra from HCL Technologies was spotted by Shiv Nadar and subsequently brought in at a leadership role in HCL. A former IAS officer, Nayyar was MD of HCL Corporation and vice-chairman of HCL Technologies when it went public. He and Gurnani were also associated with HCL Perot Systems, the JV between HCL and Perot Systems. Sanjay Kalra, who heads the BT relationship in Tech Mahindra was responsible for HCL’s purchase of Deutsche Software — a relationship that analysts said paid off very well for HCL.
Source:TOI

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