The Hindu Business Line : TCS: Joining the Ivy League

TCS may well be included in the Ivy League of international IT players after it bagged the largest ever IT outsourcing deal awarded to a single player in India.

The deal, valued at $1.2 billion over a 10-year period, with The Nielsen Company in Netherlands, overtakes Tech Mahindra’s $1 billion, five-year contract with British Telecom, and HCL’s $780 million deal with Scandia. These numbers are important because large deals such are these are apportioned to multiple vendors, with the result that the pie for any single player is moderated. ABN-Amro’s $2.2 billion dollar IT outsourcing deal was awarded to five vendors — IBM, Accenture Infosys, TCS and Patni — being a case in the point.

This deal will require TCS to deliver a full range of IT service capabilities — application development and maintenance, infrastructure services, consulting, business and knowledge process outsourcing and enterprise services.

Execution of this will ensure that TCS moves significantly up the value chain. As part of the deal, TCS will takeover the KPO team of Nielsen, based in Baroda, to enable smoother transition and a ready team to work with. A deal of this size may help TCS deploy resources and maintain optimal utilisation levels.

The deal, however poses the risk of margins coming under strain, as is the wont with large deals. The longer duration (of the deal) adds to the risk, as inflationary conditions become less predictable.

BL RESEARCH BUREAU

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