British Telecom (BT) has been a long term partner in the Tech Mahindra venture but current financial crisis in the home market of BT, Britian, has forced it to think about exiting the venture and get much needed cash from this deal. BT has released it annual report and has reported a loss and it is planning to make another 15000 employees redundant in Britain. Market situation is not improving, in the telecom domain at least, so BT has to arrange for cash from somewhere and its investment in Tech Mahindra now worth hundreds of millions.
BT and Mahindra has become heavily dependable on each other for the technology related work. A major portion of the IT related work goes to Tech Mahindra and BT contracts contribute almost 60% to the Tech Mahindra's revenue. Though the situation has changed after the acquisition of Satyam Computers by Tech Mahindra. Contribution to revenue from BT operation will go down to 25% for the combined entity.
In the near future BT can not move its operations away from the Tech Mahindra even if they part their ways from the venture. Tech Mahindra has gained advantage of developing and implementing most of the IT software and infrastructure for BT so it will remain preferred partner for BT. Mahindra does not have much choice here. Though Mahindra might not have cash to buy the BT stake in the venture but if it does, it will give Mahindra complete freedom in running the combined entities. Since the overall dependence on BT has down so the relation will not go sour and they should contitue to consider each other equal partner.
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