The Hindu : Business : TCS, Infosys bag mega deal from ABN Amro

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Friday, Sep 02, 2005

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Business

TCS, Infosys bag mega deal from ABN Amro

Special Correspondent

IBM chosen for IT infrastructure.

COVETED DEAL: The Chief Financial Officer and Head, Global Finance, Tata Consultancy Services, S. Mahalingam, (right) and the Vice President, Head, Banking Practice and Head, Bangalore Operations, N. G Subramanian, addressing a press conference in Bangalore on Thursday. — Photo: G. R. N. SOMASHEKAR

BANGALORE: The Amsterdam-based global banking major, ABN Amro, has signed a 1.8 billion Euro ($2.2 billion) five-year technology outsourcing deal with five IT-vendors, including Tata Consultancy Services, Infosys Technologies, IBM, Patni Computer Systems and Accenture to manage its global computer network, software development and maintenance.

TCS, Infosys, Patni Computers and Accenture would provide application support and enhancement to ABN Amro Bank for its worldwide operations, while IBM has been selected for IT infrastructure, including maintenance service and network support.

"The deal will generate committed revenues of Euro 200 million or about $260 million for TCS alone over the next five years from application support and maintenance. This is the largest deal won by an Indian IT services company ever," S. Mahalingam, Chief Financial Officer and Head, Global Finance, TCS, told reporters here.

Single largest order

Infosys termed the deal as the single largest multi-year, multi-million Euro contract ever won by the company. Infosys' share of the overall contract includes committed volumes in North America, Europe and Asia Pacific worth Euro 100 million. "This is a landmark deal for Infosys," said Nandan M. Nilekani, Chief Executive Officer, President and Managing Director, Infosys.

All the five preferred vendors will have to bid for the uncommitted part of the contract involving application development projects. The value of the uncommitted portion of the deal is not known yet.

Revenues from application development has already started trickling in for TCS with ABN Amro awarding a $15 million deal to the company for delivering its Strategic Banking Platform. "Revenues from the committed portion will start coming in from the next quarter onwards," Mr. Mahalingam said.

In addition to cutting 1,500 jobs in the wake of the deal, ABN Amro will offer another 2,000 employees the option of taking jobs with the outsourcing partners, with most to be offered posts at IBM and a smaller number at TCS. "We need to examine it. This is something that we will work out. It is too early to say," he noted. TCS would not say whether it has lowered prices to bag the deal. "We have been aggressive in terms of pricing. What is critical to look at in such long-term deals is the impact on margins. But, this deal will not result in any loss of margin to TCS," he said.

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