Engineering For Telecom BSS – Comverse & Tech Mahindra

Tech Mahindra’s recent engineering services partnership with Comverse is a significant industry event as it demonstrates the value proposition of a third party engineering services outsourcing model and creates a roadmap for other engineering service providers and enterprise buyers to follow.

Comverse, headquartered in the US, is a leading Israeli-heritage provider of software and systems including business support systems (BSS) for telecom operators. Though the financial details of the deals are not disclosed, according to media sources, the total TCV of the deal is between $150-200 Million. Tech Mahindra will be responsible for R&D and customer services while Comverse will be in charge of product management and sales. Tech Mahindra will also take on about 400 Comverse workers, up to 300 from Israel and the rest from the United States, France, Japan, Bulgaria, and India.

This Comverse deal is significant for Tech Mahindra as it will provide top-line growth in engineering services from current base of ~$400 Million (according to media estimates), stronger credentials in telecom engineering services, and a strong presence in Israel which Tech Mahindra can leverage for other engineering services deals. This deal will move Tech Mahindra closer to its vision of building a billion dollar engineering services business in next few years.

For Comverse, this deal will ensure access to engineering resources on demand and a better career path for its own engineering staff. Comverse will able to focus on building customer relationships without letting go the product management.

Engineering services buyers often ask us to define the value proposition for going with an engineering service providers over starting or growing captive operations and how can they work with engineering services providers without letting go control over their product portfolio.

Our view is that third party engineering services outsourcing model has some distinct advantages that enterprise buyers can leverage without letting go of complete control and stake in product decisions. While this deal validates our view, we will continue researching and writing more on this theme.

In our inaugural 2015 Engineering Services Blueprint Report we will try to understand the value proposition of key engineering service providers(AF, AKKA, Alten, Altran, Assystem, Bertrandt, Capgemini, Cognizant, Cyient, EDAG, ESI Group, Ferchau, Genpact, Geometric, HCL, IAV, IGate, Infosys, ITC Infotech, KPIT, L&T Technology Services, Neilsoft, QuEST Global, Ranal, Segula, Semcon, Symphony Teleca, Tata Technologies, TCS, Tech Mahindra, and Wipro) over captives to help service buyers make informed business model decisions. 

We believe that the transformation and evolution of engineering service providers will continue as we move into the “As-a-Service Economy” and that HfS with our understanding of this market and our unparalleled reach to both service buyers and service providers can be a major catalyst for the growth of this sector.