Tech Mahindra Sets Latin America Strategy, but are They too Late to the Party?

Another aspect which prompted Mahindra Tech to expand its footprint in the Latin America is the rapid acceleration of the region’s economy that is spurring growth in IT and Network spend enhanced mobile/ broadband penetration as well as large-scale consolidation in the telecoms.

Targeting Telecom: "Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself" - Harshul Asnani, of Tech Mahindra

The fourth largest Indian IT firm Tech Mahindra, the information technology arm of the US $7.1 billion Mahindra Group is among the leading communications service provider globally. Having operations in over 25 countries with as many as 17 sales offices and a total of 13 delivery centers worldwide, Tech Mahindra has now set its focus in the Latin American region with a view to draw on the growing local telecom market in the region as well as to use it as a center for near shore delivery for its clientele worldwide. Here is an excerpt of an interview with Mr. Harshul Asnani, Tech Mahindra Head for the US West, Midwest and Latin America.

Telecom Basis

“Our interest in Latin America is actually two-fold – first, to utilize the region as a hub for near shore delivery for our global clientele and, second, to tap into the burgeoning local telecom market,” revealed Mr. Asnani. Elucidating further, he said, “We are seeing increased interest from our global customers to work with us in Latin America. It (Latin America) offers the right blend of skilled resource pool and a relatively low cost base that will allow Tech Mahindra to serve its global customers in North America and Europe’.

Targeting Telecom: “Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself” – Harshul Asnani, of Tech Mahindra

Another aspect which prompted Mahindra Tech to expand its footprint in the Latin America is the rapid acceleration of the region’s economy that is spurring growth in IT and Network spend enhanced mobile/ broadband penetration as well as large-scale consolidation in the telecom sector. According to Mr. Asnani, all these aspects offers vast opportunities for a specialized Telecom-focused System Integrator like Tech Mahindra to play a key role. “Given our deep telecom experience and integrated offerings, we are well poised to deliver value to Latin American clients in terms of Network Engineering, BSS/ OSS, Integration, Transformation and VAS.

Feet on the Ground

Every new market that one ventures into has its unique set of opportunities and challenges and it was no different for Tech Mahindra when it set its footprint in Latin America. According to Mr. Asnani, the local language, regional taxation and laws are the potential challenges for the company in the Latin American market. “We realized early in the game that trying to do business in Latin America remotely from the US or India will not take us anywhere,” he says, adding, “We need feet on the ground and, hence, we are looking at hiring local employees, expanding our existing delivery center in Sao Paolo and also actively considering mergers and acquisitions in the region to create a self-sustaining ecosystem in the region.”

At the same time, the Tech Mahindra head for Latin America operations pointed out that they are still in the initial stages of building their business in the region and are leveraging the existing infrastructure of its subsidiary Mahindra Satyam (formerly Satyam Computer Services Ltd., which Tech Mahindra acquired in 2009) in Sao Paolo to build our business. We are pursuing organic and inorganic means of growth in the region,” Mr. Asnani said.

The LATAM Advantage

According to Mr. Asnani, the biggest advantage or opportunity that he sees in Latin America is the growing economy and rapidly expanding communications industry in the region, which offers Tech Mahindra great prospects in the areas of system consolidation, integration and IT/ Network transformation. At the same time, he says that the export promotion agencies in Brazil, Mexico and Colombia have been very receptive to Tech Mahindra and have offered a variety of benefits to set up its operations in these countries. “However, this is still under consideration,” he clarified.

Mr. Asnani further said, “Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself.” At the same time, the Tech Mahindra executive pointed out that they are looking at a dual strategy of using our base for local as well as international operations.

Moreover, Tech Mahindra finds that geographically, LATAM has a distinct advantage over India given the time zone proximity to US, Canada and even Europe. According to Mr. Asnani, another big advantage that LATAM brings is language, which is a big plus for Latin speaking European countries for whom offshoring mean Latin America and not India.

Preferred Locations

Presently, through Mahindra Satyam, Tech Mahindra has approximately 80 professionals on its rolls in Brazil and they intend to increase the employee strength during the ensuing quarters. In addition, the company also has resources deployed in Mexico on customer projects.

Talking about his company’s future plans in the region, Mr. Asnani said, “We are very bullish about Latin America and are looking at it as our next frontier of growth. According to him, the company’s initial go-to-market focus will be in Brazil, Mexico and Colombia, which comprise almost 70% of Latin America’s economy. In the next phase, they would look at Argentina, Chile and Peru.

“In terms of recruitment, we are considering using Brazil as our delivery hub for Latin America. The recruitment will be done in lockstep with the contracts we are able to bring to the region. In line with our strategy to look at LATAM as a self-sustained P&L center, we will hire local talent and build our base closer to the availability of talent pool, Mr. Asnani said, adding, “In addition to Sao Paolo, we see good potential in locations Campinas, Londrina, Belo Horizonte, etc.”

 

Mr. Asnani further said that Tech Mahindra is also actively looking at acquiring a company that can bring it either unique capability or local relationships that complement the strong telecom solutions and SI expertise that the Indian tech firm can bring to the Latin America market. “An acquisition would also bring us quick access to management bandwidth, market accessibility and better scalability,” pointed out.

“Our intent is to hire local talent and plough investments that would further fuel our growth in the region. We want Latin America to be a self sustained unit with its own sales, presales, delivery and back office support. In view of this, we are also talking to local companies that we can either partner with or acquire,” Tech Mahindra boss in-charge of the company’s affairs in LATAM assured.

Targeted Verticals

 

Talking about the targeted verticals, Mr. Asnani said, “While Mahindra Satyam will continue its focus on other verticals, Tech Mahindra is exclusively focused on Telecom. With over 35,000 professionals deployed globally, we are one of the largest Telecom SI and outsourcing firms in the world. We are investing in building high level of competencies in technologies such as Cloud computing, Web 3.0, 4G etc which will define the future of telecommunications.” He further said that Tech Mahindra is looking forward to bringing this expertise to the Latin American market and is seeing a lot of similarities between the emerging markets in Asia/Middle East and Latin America. “Therefore, we are keen to replicate our experiences and business models that we have successfully applied in other parts of the world,” he asserted.

When asked about the company’s clientele in Latin America, Mr. Asnani said, “Over and above some marquee international and regional customers we have in the region through Mahindra Satyam, Tech Mahindra has also been chosen by a large Latin American Telecom company as preferred software solutions partner.  We are also in active discussions with some of our other multinational customers to set up base in Latin America.”

Exporting Services from LATAM to India

Referring to the issue of exporting services from the Latin American region to India, Mr. Asnani said, “The amount of work executed in Latin America v/s India would essentially depend on the nature of the project, the contractual terms and commercials. However as a thumb rule, we believe that if we have to be successful, we need to deliver close to the customer. And this has more to do with the outsourcing maturity of customers and the language issues in trying to do work out of India.” Mr. Asnani further said that they believed that roles where a high amount of customer interfacing is required need to be based out of their local delivery center in Latin America or even on customer premises (as deemed appropriate). “The low end work can be carried out in India, which still offers reasonable cost advantage over Brazil,” he opined.

Tech Mahindra Versus the Competition

Commenting on his company’s role vis-à-vis other multinationals in Latin America, Mr. Asnani said, “Tech Mahindra today enjoys an enviable position in the telecom world. Our expertise spans IT, BPO and network technologies, which helps us to bring end-to-end solutions to our telco customers. This, coupled with our creative business models and experience in helping some of the leading telecom operators worldwide in their transformation journey, gives us a unique advantage as we make our foray in the LATAM market.”

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He further said that while there is a couple of American multinationals in the telecom space in LATAM, Tech Mahindra does not see many Indian tech firm playing in this area. “Having met CXOs in some of the top telecom operators in the region, I am convinced that there is room for a specialized and domain focused organization like us to play a role. We see a distinct service and expertise gaps in the market that we intend to fill”, the Tech Mahindra boss for Latin America observed.

A Decade Ahead

When asked to comment on Tech Mahindra’s position in Latin America a decade from now, Mr. Asnani remarked, “A decade is too far out to predict in this dynamically changing world! Tech Mahindra aims to be among the leading companies in all the markets we serve. We hope to consolidate our leadership position in India, USA and Europe. Latin America is a centerpiece of our Americas strategy and if I had a crystal ball, I would hope to see us as a well respected

Currently the Head of US West, Midwest and Latin America at Tech Mahindra, Harshul is a business development executive with 15 years of accomplishments in strategic solution sales, structuring large deals, building consulting/outsourcing practices and management in the IT industry. He has worked at leading IT product and consulting firms like Wipro, Compaq, HCL Technologies and Patni Computers in a variety of sales and business development roles prior to joining Tech Mahindra.

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