IT majors ‘rebadge’ client employees in large outsourcing deals

TE Raja Simhan Chennai | Updated on February 02, 2021

Continue to expand onshore talent

The first quarter of 2021 belongs to India-centric information technology (IT) service providers, including Tata Consultancy Services, Cognizant, Infosys, HCL Technologies and Wipro, as they demand considerable attention at the start of year for their sales motions; talent strategies and avenues to new partnerships and intellectual property, according to report by the US-based research firm Technology Business Research (TBR).

In a return to the old-school tactic of ‘rebadging’ — wherein a vendor takes over a client’s IT/Business Process department as part of a deal — client employees, India-centric vendors have begun winning large outsourcing deals. This is in part because the pendulum has swung back to clients demanding ‘run-the-business’ which naturally favours outsourcing by low-cost offshore IT services vendors, said the report authored by Patrick M. Heffernan, Principal Analyst, TBR.

Large deals

On large outsourcing deals, the references in the report are geared toward Infosys’ wins with Vanguard, Daimler AG and Rolls Royce as well as TCS’ similar wins with Prudential where TCS acquired/rebadged 1,500 employees from Prudential’s IT services subsidiary, Primarica Systems Ireland Ltd, said Boz Hristov, Professional Services Principal Analyst, TBR.

Also read IT hiring is back with a bang

TCS also acquired 1,500 employees from Deutsche Bank’s internal IT services provider, Postbank Systems AG (PBS) and Wipro’s $1-billion deal with Metro AG whereas part of the engagement 1,300 IT employees from Metro AG will work as part of Wipro in countries like Germany, Romania and India, Hristov told Business Line.

Developing talent onshore

The report said with attrition diminished by Covid-19, India-centric vendors will continue to push to expand onshore US talent, including in ‘ruralshore’ locations. By focusing on recent university graduates, they can access relatively cheap talent, spend less on visas, and market locally based talent as part of their sales pitch.

In addition, all IT services vendors could face a tech talent threat from cloud and software majors. While companies such as Google and Microsoft have mostly gone after upper-mid-level and senior-level services talent, strategies could change as those software and cloud vendors expand their services capabilities, the report said.

Published on February 02, 2021

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