The centre will be built in an area of 15 acres and will seat 5,000 professionals, a company release said.
"We have chosen Chandigarh because of its rapidly growing infrastructure, IT friendly policies and access to a pool of high quality software professionals," Tech Mahindra managing director and CEO Vineet Nayyar said.
Tech Mahindra, a subsidiary of Mahindra and Mahindra, has over 600 IT employees at its Chandigarh development centre.
The company has posted a total revenue of $648 million is on March 31, 2007.