Indian services majors to bag large orders  

BANGALORE: Indian IT service providers such as Infosys,

Wipro and TCS

which are witnessing increased revenue growth due to the positive response

to offshoring among customers, may land bigger outsourcing deals into their

kitty, according to technology sourcing advisory TPI.






“In the last 18 months Indian companies are bagging deals in the vicinity of
$100-200 million. We can expect more such deals this year,” said Siddharth Pai,

partner and MD, TPI

India.






However, he said that MNC companies like IBM still held an advantage owing to
their full service portfolio. “Indian players have to cover ground in process

consulting and business consulting to build traction,” he added.






He said that global customers preferred Indian players for application
development and management services.






Market
trends
on global outsourcing in the latest TPI index for Q1 '06 (January

to March 2006), indicate the heartening trend of a healthy increase in the

number of outsourcing deals. “This is the strongest quarter in the last seven

years with 83 outsourcing deals valued at $22.7 billion,” said Pai.






Another key trend this quarter were restructurings of existing contracts that
include renegotiations, extensions and renewals to existing agreements. As many

as 19 contracts worth $7.5 billion were restructured in Q1. TPI reckons that the

customers' increased inclination to offshoring is a major reason for

restructuring.






“Customers want cost savings for their projects and find the existing contract
values very higher. So they want to offshore their projects,” said Pai.






He added that customers preferred to offshore ADM projects while new application
development tended to remain offshore.






BPO also saw a distinct increase this quarter with the number of BPO
transactions going up 63 percent year-on-year, totaling 49.






On the total cost savings delivered by outsourcing, TPI revealed that the market
figures have previously overstated the cost savings as close to 60 per cent.






TPI however, puts the net savings of professional fees, severance pay and
governance costs between 10 per cent and 15 per cent.