Indian IT service cos win bigger deals  

BANGALORE: The big five IT services companies, TCS,

Wipro, Infosys, Satyam and HCL, have increased their market share in the total

value of outsourcing contracts from one percent in 2004 to 5.2 per cent this

year, said Indian Sourcing advisory firm TPI.






The IT services big six including IBM, Accenture, ACS, HP, EDS and CSC continue
to dominate the offshore outsourcing market accounting for 73 per cent market

share while Indian players have managed to garner 18 per cent share in the first

half of 2006.






TPI, which tracks sourcing contracts every quarter, said that the average deal
size for Indian service providers has increased this year and stands at around

$160 million in the first half of calendar year 2006.






The first half of this year saw 150 IT and BPO transactions valued at $138
billion. More BPO deals were signed in the quarter ended June 30th, around 92,

than any previous quarters. This is a 58 per cent increase year-on-year. The 92

contracts are valued at $11 billion. “Most of these are single process deals.

Around 38 per cent of the deals involved financial services processes,” said

Siddharth Pai, partner and MD, TPI India.






Pai said that the duration of contracts was shrinking from ten years to five
years. Around 32 per cent of the overall contracts were restructured and renewed

this quarter. “Around 90 restructuring deals are under process for reasons such

as renewal of contract, extension of the scope of the deal and addition of new

areas and also renogotiation,” Pai said.






Contrary to Indian market expectations, restructuring of contracts does not
translate into a larger window of opportunity for Indian players. “We have found

that around 87 per cent of the deals that are being renegotiated are awarded to

the incumbent service providers and not to offshore competitors,” said Pai.






He attributed this to MNC players like IBM and Accenture increasing their
offshore capacities in India. He said that in some of the bids for projects, MNC

players even undercut the Indian service providers.






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