$1 Billion outsourcing deals may come to India

New Delhi: As firms in verticals like retail, banking, telecom and utilities try to manage the renewed demand for their services and also lower their operational costs, large outsourcing contracts worth nearly $1 billion may come to India. Last week, outsourcing experts and industry officials told that auto customers too are looking to award large contracts for managing their business and IT systems this year, reports Pramugdha Mamgain of Economic Times.

British Petroleum's IT contract worth $1.5 billion awarded to Indian IT majors TCS, Infosys and Wipro early this year was one such mega deal. There are several such projects lined up in the country's power sector as well, said Everest Group Country Head Gaurav Gupta. "Governments in the U.S. and other western markets tend to account for a big chunk of mega deals, but Indian companies are not strong contenders," he said. According to him, large deals for Indian firms are typically in the range of $50-100 million, though some Indian IT services vendors currently have some mega outsourcing contracts in the pipeline.

The latest TPI Index shows that almost $25 billion worth outsourcing contracts were awarded in the fourth quarter of 2009, up 47 percent over the third quarter. Each of these three large industry verticals, including financial services, manufacturing and telecom, saw sequential growth of 33 percent, 76 percent and 24 percent, respectively, in the second half of the previous year. In 2009, almost 70 percent of all broader market contracts were valued at under $100 million in total contract value globally.

"We see both large and small deals coming back to the table. Although the traditional verticals like telecom, financial services and manufacturing have gained volume, it has been observed that new verticals like retail, media and entertainment, healthcare are also driving growth," said Suresh Sundaram, HCL Technologies Global Head for Marketing and Strategy. He added that sectors like public services and energies and utilities and geographies such as Continental Europe, Asia and Latin America should be the ones to watch for in the long term.