IT Outsourcing India

BANGALORE/NEW DELHI: Top outsourcing firms including TCS, Infosys and Patni Computer wait for more clarity at RBS-owned ABN Amro, as the management remains undecided about outsourcing deals worth $400-500 million signed by the erstwhile Dutch bank four years ago with these vendors.

In April 2005, ABN Amro had announced several contracts worth nearly $2.5 billion, due to be renewed in 2010. While IBM had won the lion’s share of the deal (around $2 billion) for managing the bank’s servers, desktops and other IT infrastructure, Accenture, TCS, Infosys and Patni shared $400-500 million worth of contracts for software application, development and maintenance.

At least three people familiar with the sourcing decisions at ABN Amro told ET that while RBS is yet to take a call on whether it wants to integrate its technology and business systems with ABN Amro, there is a definite move to shrink the Dutch bank’s operations through a sale, which will bring down the outsourcing revenues for these vendors as well.

“It’s not business as usual. We are told it could take another few months before any clarity emerges. The 2010 renewal is not the only issue. The business seems to be getting smaller,” said a senior executive at one of the top tech firms serving ABN Amro. He requested anonymity because he is not authorised to speak about customer engagements.

Experts like Bob McDowall of Tower Group say RBS, which is now a nationalised bank in the UK, is under pressure to sell assets outside of UK. “IT integration (with ABN Amro) has effectively ceased. RBS certainly will not be planning IT integration initiatives that will make a sale or disposal of the ABN Amro businesses more difficult,” he said. “I would suggest that the longer-term prospects for the contract will depend on when and who acquires the relevant businesses in ABN Amro supported by the outsourcing contracts,” he added.

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BANGALORE: IBM has announced that it has signed a 10-year-information technology outsourcing agreement with Innovation Auto Risk, providers of claims management services and other related solutions to insurers and fleet management firms, to support firm’s expansion and growth plans.

As part of the agreement IBM will deploy server, storage networking and security IT infrastructure to be hosted at a data centre in Delhi. IBM will provide 24 X 7 onsite infrastructure monitoring services and ongoing project management for infrastructure procurement, commission and configuration, as well as hardware refreshes for five years.

This agreement aims at reducing Innovation Auto Risk capital infrastructure expenditure on IT by 25 per cent, a release said.

"IAR needed to build a robust infrastructure to address the growing claims processing requirements of their customers and we were able to provide this using a unique model that helped them grow without the headaches of managing their back-end and the need for huge capital requirements," Country Manager –ibm.com, IBM India/South Asia Jyothi Satyanathan, said.

Source: http://infotech.indiatimes.com/

Indian outsourcing companies figure among the top ten worldwide in IT infrastructure services, reflecting the growing appeal of offshore delivery of these services, according to outsourcing consultancy Technology Partners International (TPI).

Indian outsourcers figured in the top ten by value of contracts closed in the first half of this year, not only in their traditionally strong area of application development and maintenance (ADM), but also in infrastructure services, Siddharth Pai, a partner at TPI, said on Thursday.

That Indian companies such as HCL Technologies and Wipro have made it to the top ten in infrastructure services, a relatively new area in IT services for Indian outsourcers, suggests that customers are now considering seriously the option of remote delivery of these services from offshore locations like India, Pai said.

Indian companies figured in the top ten last year in ADM but not in infrastructure services, according to TPI data.

TPI released its index this week covering the global commercial outsourcing market in the second quarter and the first half of this year.

The market for outsourcing has shrunk to US$40.2 billion in contracts in the first half of this year from $51.5 billion in the first half of last year. TPI monitors contracts of a value of $25 million and above.

It is unlikely that the outsourcing market this year will grow to last year’s level of $93.1 billion, and is more likely to end this year with total contracts of less than $80 billion, Pai said.

Top Indian outsourcers have reported flat or declining revenue in the quarter ended June 30. Infosys, India’s second largest outsourcer, has forecast that revenue for its fiscal year ending March 31, 2010 will decline by 3.1 to 4.6 percent over revenue in the previous year.

Source: http://www.pcworld.com/

Wipro, one of India’s largest outsourcing companies, reported a 3.3 percent dip in U.S. dollar revenue for IT services during the quarter ended June 30.

Wipro’s revenue from IT services during the quarter was about US$1 billion, and the company said it expects revenue will be about the same during the current quarter. IT services accounted for 77 percent of Wipro’s revenue during the previous period.

Besides IT services, Wipro has an IT products business, and consumer care and lighting businesses.

Other large Indian outsourcing companies, including Tata Consultancy Services, the largest, also reported a decline in their U.S. dollar revenue during the quarter. India’s second largest outsourcing company, Infosys Technologies, said earlier this month that revenue for its current fiscal year, which ends March 31, 2010, will decline by 3.1 percent to 4.6 percent compared to the previous year.

The results for these outsourcing companies look better in Indian rupee, because of the long-term depreciation of the rupee against the dollar and currency hedging, said Siddharth Pai, a partner at outsourcing consultancy firm, Technology Partners International.

For example, Wipro said that its revenue from IT services in the quarter ended June 30 was 48.27 billion [b] Indian rupees (US$1 billion at the exchange rate on the last date of the quarter), up by 10 percent from the same quarter in the previous year.

However, the U.S. dollar revenue is the better indicator of the performance of Indian outsourcers because 70 percent of their revenue is denominated in dollars, Pai said.

Earlier this month, the National Association of Software and Service Companies said dollar revenue growth from offshore outsourcing may drop to less than 10 percent during the current fiscal year from 29 percent two years ago.

Source: http://www.businessweek.com/