The Hindu Business Line : TCS, Infosys likely to bag $1.2 b ABN Amro outsourcing deal

THE Dutch financial powerhouse ABN Amro is close to finalising a multi-year, mega outsourcing deal with Indian software majors Tata Consultancy Services (TCS) and Infosys Technologies Ltd.

The size of the multi-year contract is expected to be around $1.2 billion of which the offshore component is around $500 million. Traditionally, a significant chunk of offshore components of such projects flow into India. ABN Amro is expected to make an announcement sometime in early September.

When contacted, TCS and Infosys declined to comment. Infosys's shares closed Rs 29.70 higher today at Rs 2,377.25. Traded volumes touched 1,14,997. TCS' shares closed at Rs 1,405.85, up Rs 21.80 over Tuesday. Volumes touched 2,33,964.Speculation is rife that Indian vendors could get significant chunks of the application development and maintenance operations that ABN Amro is outsourcing. TCS and Infosys are poised to benefit by virtue of their sheer size.

Global IT giants Accenture Ltd and IBM were among the front-runners as primary vendors for the infrastructure part of the mega services contract. This mega deal is said to be one of the largest in Europe from a major bank in recent years. ABN Amro had signed up EDS for a $1.3-billion outsourcing deal in 2002. For the present deal, ABN Amro had invited bids from global IT firms sometime in 2004 for three areas within its IT department, i.e., IT infrastructure, application support and enhancement and application development outsourcing.

The IT infrastructure component of the ABN Amro deal involved the basic network, servers and other hardware within the company, whereas the application development and maintenance involved offshore component.

Reports in international industry magazines early this year suggested that ABN Amro planned to outsource 2,300 IT jobs in a bid to cut costs.

The bank is said to have trimmed its IT workforce to around 3,500 after a layoff sometime early this year, wherein some 1,500 jobs were slashed. These reports indicated that these measures were part of a plan to save more than $1 billion annually. ABN employs more than 97,000 people across its over 3,000 branches worldwide.

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