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Merger of two telcos benefits the Indian IT biggies


22 Mar 2011
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Bangalore: The telecom world is buzzing with the news of AT&T planning to buy T-Mobile and the talk of the town is that the deal will benefit the Indian IT Industry to a large extent especially the biggies like Infosys, Cognizant and Tech Mahindra. With the two telecom companies coming together they bring a bag full of goodies which are hundreds of millions worth projects. The projects are the future prospects of the two companies integrating their systems and to lower their operational costs.

AT&T is the key client of IT giants like Tata Consultancy Services, Infosys, Wipro and Tech Mahindra and they have high hopes on bagging projects from the company whereas Cognizant is vouching for both AT&T and T-Mobile.

If the deal clicks between the two telcos then the outsourcing projects will demand regulatory approvals that could include integration of billing and customer systems apart from consolidation of other operational support systems. But the market for outsourcing projects from telecom companies have gradually reduced as they have trimmed their budgets and have planned to work with other vendors at lower rates. BT, which once was Infosys' top customer contributing some $300 million every year in revenues is now down to almost $100 million a year.

Tech Mahindra which does huge amount of business with AT&T is said to benefit the most as they have also plans to enter T-Mobile also. TechM have geared up their mobile technology area across the globe and they are racing fast among others to bag the deals by leveraging their AT&T relationship.
Infosys and Cognizant are the only other two companies who are planning an aggressive approach to gain entry into AT&T. Infosys shall definitely try to move into AT&T quicker now but they have lost grounds in many areas inside AT&T. Cognizant on the other hand is definitely going to be more aggressive and had already started getting inside AT&T doing smaller projects.

"In general, merger integration work typically is good for outsourcing because a large amount of Systems integration work needs to be completed in a short period of time. Hence if this merger has any impact on the offshore firms, it is more likely to be positive," said Peter Schumacher, CEO of European advisory firm Value Leadership.

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