Tech Mahindra posts profit warning: The end for Indian outsourcing?

‘Seasonally weak’ mobility business to blame

Indian outsourcer Tech Mahindra, which bought disgraced rival Satyam in 2012, has issued a profit warning — the first sign of trouble in the buoyant market for some time.

In a regulatory filing to the Bombay Stock Exchange, it blamed a "seasonally weak" mobility business for dragging down first-quarter revenue, with shares falling over seven per cent to 482 rupees ($7.54).

It said: "Some headwinds and tailwinds could see a risk of marginal decline in both revenue and EBITDA on a sequential basis."

Anthony Miller, analyst at TechMarketView, said the warning was noteworthy given the pace of growth in most Indian outsourcing outfits.

"I can’t remember seeing a profit warning from an Indian pure-play," he said.

Tech Mahindra had recently announced a £50m, 10-year deal with CircleHealth which operates a network of NHS and private hospitals

The firm first bought a controlling stake in Satyam in 2009 after the firm became embroiled in one of India’s biggest ever corporate scandals.

Last month the former chairman of Satyam, Ramalinga Raju, was jailed for seven years for his part in a $1.4bn (£953m) accountancy fraud scandal. ®

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