The Hindu Business Line : HCL Tech bags Rs 1,500-cr deal from European co — To provide total outsourcing services to DSG

IN what is being billed as the biggest contract won by an Indian IT company, HCL Technologies has bagged a Rs 1,500-crore ($333 million) five-year co-sourcing deal to provide total outsourcing services to Europe's leading electrical retailer, DSG International.

"This is the biggest deal signed by an Indian IT company, and is also the first total IT outsourcing deal involving the taking over of a department of a large multi-billion dollar corporation. This is also the largest infrastructure management deal ever signed," said Mr Vineet Nayar, President, HCL Technologies.

The outsourcing deal would entail system development, application delivery and infrastructure support, industry sources said.

DSG International trades in 14 European countries and serves 100 million customers each year. In the UK, it trades as Dixons, Currys, PC World and The Link. The group specialises in the sale of high technology consumer electronics, personal computers, domestic appliances, photographic equipment, communication products and related financial and after-sales services.

As part of the deal, HCL would take 350 DSG employees on its rolls. "These 350 people in London would also form the base of our outsourcing retail strategy. They will work not only for DSG, but also be a part of our base for approaching other retail customers in the outsourcing strategy," he added.

Mr Nayar declined to divulge the average margins for HCL during the five-year contract. Sources, however, said there would be a one-time entry bonus for the 350 people and the margins would be lower in the beginning and increase over the years as HCL makes productivity, efficiency and transformational gains.

On the whole, margins would move upwards from the second year and HCL would see the impact from the third year. The revenue accruals from the deal would be split evenly over the five years. "The execution of the contract will begin from the next quarter," Mr Nayar said.

The deal is also likely to create capacity for 1,000 people in India. "We cannot comment on manpower ramp-up, but the delivery would happen from Noida and Chennai," Mr Nayar said.

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