LONDON, UK: When it comes to IT outsourcing, the world's largest steel company still prefers India. Satyam Computer Services and MindTree Consulting have entered into framework agreements with the Luxembourg-based giant as part of ArcelorMittal's decision to consolidate all its technology subcontracting, done by several vendors, to just two partners.

"It's expected that approximately 70 percent of the subcontracted activities in the scope of this initiative will be carried out by the new vendors, allowing internal ArcelorMittal IT employees to focus on high-value adding activities," the steel major said in a statement.

The companies declined to discuss the value of the deal, but analysts in Mumbai said it would be a revenue booster for both Satyam and MindTree, given that the IT needs of a company, with sales of $105 billion, are unlikely to be modest. ArcelorMittal said the specifics of the services to be provided by these two firms would be defined in discussion with all key stakeholders. Analysts said the value of the deal would depend on the specific projects to be won by either of these companies.

MindTree, in a separate statement, said it will deliver IT services to ArcelorMittal's Western European operations in partnership with Sopra Group, an incumbent provider of the steel company. It derives more than a fourth of its revenues from manufacturing clients.

For Satyam, which has already been serving ArcelorMittal for the past three years, the new deal marks a significant expansion of that relationship. Manufacturing is the largest revenue contributor to the company, accounting for 27 percent. Satyam has 90 clients in this segment.

ArcelorMittal said the projects would bring in cost-efficiency and flexibility to its IT operations. The move is an effort to streamline and consolidate its global IT supply chain, following an in-depth evaluation of the processes. There will be no direct ArcelorMittal job losses as a result of this initiative. ArcelorMittal's financials for 2007 show revenues of $105.2 billion, with a crude steel production of 116 million tonnes, representing around 10 percent of world steel output.

Source: Agencies