Thursday, February 02, 2006

Coming of Age of the Indian Information Technology Trio

Wipro wins $300 million contract from General Motors - 2 Feb, 2006

Infy , TCS major chief vendors in ABN Amro $2.2 billion contract - Sep 2005
( Infy $175 million, TCS - $260 million )

Within a span of 6 months, Wipro, TCS and Infosys, the triumvirate synonymous with home grown Information technology majors has won multi-million dollar contracts. While this was expected given the home turf strength of these companies and the huge cost savings they portray and even deliver to their clientele, what was not expected is the speed with which they emerged as major competitors to the established players like IBM, EDS, HP, ACS, CSC, etc and made a dent on their hold on the Fortune 500 clientele. Their very emergence prompted these other players to turn their attention to India as a source of talented and skilled graduates who could do the same work as computer engineers elsewhere in the world, at a fraction of the cost, while maintaining the same quality standards. The above contracts are also a big milestone in the Indian Information technology saga as they catapulted all these three players from being secondary players in their client companies GM and ABN Amro, to the coveted position of being the primary information technology vendors. And significant also is the fact that these contracts have been awarded not for 1 year, but for a full 5 year period. That should speak volumes of the confidence the three Indian companies have been able to garner from their clientele. It also sends out strong ripples among the world's corporate circles reminding them of the new kids on the block.

TPI, a global sourcing advisory company for corporates, has come out with a report that states that about 128 multi-million dollar information technology contracts will be up for renewal in 2006. The total worth of these contracts is $37.6 billion. 70% of these contracts are currently held by CSC, EDS and IBM. TPI's managing director, Duncan Aitchison has this to say, "With such a significant volume of outsourcing contracts nearing their renewal date, 2006 could witness interesting shifts in the market share of the Big Six* and other providers. As the recent ABN Amro deal demonstrates, Indian providers also now compete for and win the biggest application development and maintenance contracts."

According to the consultants at the Everest Group, while IT giants like Accenture and IBM currently dominate the finance and accounting outsourcing space, "they are increasingly being challenged by the Indian offshore providers".

So with at least 128 contracts up for renewal in 2006, will the big boys be able to hold on and grow their market shares? Or will the smaller players be successful in breaking the stranglehold of the traditional IT service giants?

One thing is certain. After years of dominating the global outsourcing scene, the big boys are in for their biggest fight and the Indian trio is very much capable of packing a punch to take the wind out of the Big Six.

*Big Six in IT outsourcing = Accenture, Affiliated Computer Services(ACS), Computer Sciences Corporation(CSC), Electronic Data Systems(EDS), Hewlett-Packard(HP) and IBM


MediaResearcher said...

Check your source of failed to include HP as one of the Big 6 outsourcing vendors - it's not Capgemini.

Vijay said...

You are right. Thanks for pointing it out. It was an oversight from my side.


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