TCS in $1.2 bn outsourcing contract
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TCS in $1.2 bn outsourcing contract

The software major bags the outsourcing contract from The Nielsen Company, a US-based information and media company in a 10-year deal, reports Venkatesh Ganesh.

business Updated: Oct 18, 2007 23:24 IST
Venkatesh Ganesh
Venkatesh Ganesh
Hindustan Times

Software major Tata Consultancy Services (TCS), which was the first to brack the billion-dollar rubicon in revenue among Indian software companies, has now bagged the largest outsourcing deal in the Indian software sector.

TCS has bagged a $1.2 billion outsourcing contract from The Nielsen Company, a US-based information and media company in a 10-year deal that involves maintaining IT systems, providing support to IT systems remotely, developing and maintaining HR, accounting software and providing back office services to Nielsen.

These services would be delivered from across its global development centres in India, Latin America and Europe.

TCS would also set up an innovation centre for Nielsen, which would work on its future IT requirements.

The deal, however, does not include asset takeover, something that companies like IBM do when they take up large outsourcing deals.

As a part of the deal, TCS would take over the captive BPO unit of Nielsen in Baroda, which does high-end work like analytics. The unit has 350 employees.

TCS shares closed at Rs 1,118, up from its previous close of Rs 1,095

While the location of the innovation centre is yet to be finalised, TCS Chief Executive S. Ramadorai said that it could either be in Chennai, Hungary or Brazil. TCS has similar innovation centres in Chennai, which services the retail and airline sectors.

Analysts see the deal as a positive sign for the Indian IT industry. “The rising rupee and uncertainty over outsourcing demand from the US were major concerns, but this deal shows that demand for IT outsourcing is still strong there,” said an analyst from a Mumbai-based brokerage.

Benefits from such transformational long-term deals would kick in a few quarters and it is clearly an indication of Indian IT companies moving up the value chain, another analyst said.

Media and telecom contributed 16.09 per cent of its revenue in 2006-07. TCS officials said the deal was bagged amid competition from other software majors like Accenture, IBM and Infosys.

First Published: Oct 18, 2007 23:09 IST