Pune based telecom software servics company Tech Mahindra has signed a five-year outsourcing deal with British Telecom (BT) that is expected to generate revenues of over $1 billion. This is the largest contract bagged by any software services firm in India.

The company will support BT’s planned growth of managed services to business customers around the globe and continue to provide ongoing services related to BT’s internal systems, processes and reusable platforms.

BT is already the largest customer for Tech Mahindra and contributes over 69% of its total revenues. The company had revenues of $270 million in 2006. The deal could potentially nearly double the firm’s revenues next year. However, analysts are skeptical about whether such high numbers will be realized.

BT itself is bidding for outsourcing deals across the world so it’s possible BT may decide to pass on some of the wins to Tech Mahindra.

“Since there appears to be a significant subcontracting component to this deal, the actual size of the contract will depend upon several factors, including BT’s own ability to get customers,” said Siddharth Pai, a partner at the strategic analyst firm TPI.

Both companies have a 20-year history together. Tech-Mahindra was earlier called Mahindra-British Telecom (MBT), and it was a joint venture between British Telecom and Mahindra & Mahindra. MBT was renamed Tech-Mahindra before it went public earlier this year.

British Telecom has a 36% stake in Tech Mahindra. Mahindra group holds 51% in the company, while the remaining is with public.

Sources: Red Herring and ET