HCL Tech may sign $400 m outsourcing deal

By Shailendra Bhatnagar





NEW DELHI - HCL Technologies Ltd. is close to signing a $400 million, multi-year
outsourcing deal with a unit of South Africa's biggest insurer Old Mutual, an

industry source said, boosting its stock nearly 7 per cent.






Indian software services companies have been thriving on an outsourcing boom and
analysts say they are expected to grab a growing share of large deals as

pressure rises on more companies in the United States and Europe to cut costs to

stay competitive.






"The deal with Skandia can be signed fairly soon," the source, who declined to
be named, told Reuters.






Old Mutual won control of Swedish savings firm Skandia earlier this year with a
4 billion pound ($7.35 billion) hostile bid after a protracted takeover battle.






HCL Technologies, based on the outskirts of New Delhi, declined to respond on
individual client orders.






"HCL has adopted and articulated multi-service, multi-million dollar client
engagement strategy," Vineet Nayar, president at HCL Technologies, said in a

statement.






Officials at Skandia could not be immediately reached.





Harmendra Gandhi, software analyst at BRICS Securities, said the proposed deal
would boost HCL Technologies' profile.






"For a billion dollar company to get a $400 million plus contract is a very
positive development," said Mumbai-based Gandhi.






Shares in HCL Technologies, India's fifth-ranked software services firm, rose as
much as 6.9 per cent to 540 rupees in a firm Mumbai market. They later retraced

to 526 rupees by 11:40 a.m. , up 4.2 pe rcent.






"We think the shares have corrected significantly over the past two months and
looks attractive compared to larger peers," Gandhi said.






India's large pool of English-speaking engineering workforce and cheaper wages
of nearly one-fifth of western salaries have helped attract outsourcing deals

over the past decade.






India's $23 billion software industry is likely to see a rise of 25-28 per cent
in exports for the year to March 2007 as demand for outsourcing remains strong,

the National Association of Software and Service Companies (NASSCOM) said in

June.






The top three Indian software exporters Tata Consultancy Services Ltd., Infosys
Technologies Ltd. and Wipro Ltd. all boast more than a billion dollars in annual

revenue.






Last year, a $2.2 billion outsourcing deal from ABN AMRO Bank was split between
Indian firms Infosys, TCS and Patni Computer Systems Ltd. and global companies

Accenture and IBM.






(Additional reporting by Nitin Luthra)