BT awarded a five-year, $1 billion ($514 million) outsourcing contract to Indian services company Tech Mahindra, in which it holds a stake to support the growth of BT's managed services for businesses worldwide.

Pune-based Tech Mahindra, will add 3,000 to 4,000 new staff during the course of the five-year contract, which also includes services related to BT's internal IT systems.

The Indian company will establish centres close to the BT customers it serves, although most of the staff additions will be in India to take advantage of the lower cost of staff there, a spokesman for Tech Mahindra said.

BT has a minority stake in Tech Mahindra, holding about 35% of the company. BT's business counts for almost two-thirds of its revenue, not including the new contract.

Tech Mahindra has about 17,000 staff serving telecommunications service providers, equipment manufacturers, software vendors and systems integrators.