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Tech Mahindra Plans to Buy Software Developers in Latin America

Tech Mahindra Ltd., partly owned by BT Group Plc., plans to acquire software companies in Latin America to help more than double sales in the next three years.

Tech Mahindra aims to buy companies that write software codes for telecommunications, oil and gas and financial services industries, Vivek Kalra, a vice president, said in an interview today. The acquisition will be done jointly with Satyam Computer Services Ltd., 43 percent owned by Tech Mahindra, he said.

The Pune, western India-based company and larger rival Tata Consultancy Services Ltd. seek to increase business in Latin American countries as telecom mergers and acquisitions in emerging markets generate new contracts. Tech Mahindra aims to boost revenue to $5 billion in part by acquiring companies, said Rajesh Chandiramani, head of the company’s India sales.

Companies in Latin America spend more on information technology “than what China spends, more than what India spends,” Kalra said. “There’s huge potential out there.”

Tech Mahindra’s shares, which have declined 29 percent this year, added 0.9 percent to 700.9 rupees at 12:16 p.m. in Mumbai.

The software exporter won a Mexican telecommunications company as its first customer in Latin America in the quarter ended in June, Kalra said.

Tata Consultancy, India’s largest software exporter, bought all the shares it didn’t own in TCS do Brasil, its Brazilian joint venture, for $33 million in May 2007. The company earlier acquired Chile’s Comicrom for $23 million in cash.

Spending on Software

Worldwide IT spending by businesses and governments, which includes computer equipment and software purchases, will grow 7 percent this year to $1.6 trillion, after falling by 8.6 percent last year, according to an Oct. 15 report from Forrester Research Inc.

Tech Mahindra gained control of Satyam in May last year in an auction held by a government-nominated board after the Hyderabad-based company was embroiled in India’s biggest corporate fraud investigation. The two companies had a combined revenue of 101 billion rupees ($2.3 billion) in the year ended March 31.

BT owns 24.5 percent of Tech Mahindra, according to data compiled by Bloomberg.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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