Shares of group firm Tech Mahindra jumped 9.35 percent to 740.0 rupees ($16.41), while outsourcer Mahindra Satyam rose 3.36 percent to 64.65 rupees on the Bombay Stock Exchange after the agreement was announced.

The alliance will involve multiple contracts across regions between the firms, Mahindra group managing director Anand Mahindra told reporters.

The two companies have invested an initial combined 100 million rupees ($2.2 million) in the alliance and expect to put in more money, officials said.

Mahindra, India's largest utility vehicle maker, and Cisco plan to jointly provide Internet-linked value-added services, boost connectivity and create virtual online dealerships for Mahindra's automobiles.

Cisco and Mahindra seek to provide these services to customers in United States, Europe, Brazil, the Middle East region and India, whose total market size for IT-linked services is estimated at more than $5 billion.