Big IT to gain as global cos tap best-of-breed vendors

[sukishan]

Big IT to gain as global cos tap best-of-breed vendors

NEW DELHI/BANGALORE: Top Indian tech firms including TCS, Infosys and Wipro are currently pursuing several outsourcing contracts worth $150-200 
million each, even as customers such as British Petroleum (BP), insurance major AXA and British bank Lloyds seek to reduce the number of IT suppliers they work with in order to rationalise costs.

At a time when companies are attempting to cope with lower demand for their products and services, outsourcing customers plan to work with fewer vendors at lower rates. Last month, Australia's biggest phone firm Telstra selected Infosys and EDS for a $450-million application development and maintenance contract and shifted work from IBM and Mahindra Satyam to these vendors.

BP, which spends in excess of $300 million every year on outsourcing, currently works with over two dozen IT suppliers and plans to rationalise its supplier base to about five. When contacted by ET on Tuesday, a BP spokesman confirmed that his company is currently in the process of reducing the number of suppliers.

"Yes, we have been reviewing our strategic IT providers and are getting close to the end of that process, but I can't confirm the number of current or possible future providers," said BP spokesman Robert Wine.

Experts such as Siddharth A Pai, partner and MD of sourcing advisory firm TPI, said, that many customers are attempting to centralise their buying power for better rates.

"During boom time, many of these outsourcing decisions were taken by operational managers. Now, companies want to rationalise those decisions by moving towards best-of-breed vendors," he said. In another instance, one of the biggest European insurance firms AXA plans to bring down its number of IT suppliers from seven to three. While TCS supports AXA's UK operations, Wipro provides IT services to the insurance firm's French business. "AXA is a large outsourcer, with hundreds of millions of pounds worth of work being outsourced," said an outsourcing expert.

He requested anonymity because he advices customers on their sourcing decisions and is not allowed to speak with the media. "Lloyds took out a large RFP of about $400 million about two years ago, and is now in initial stages of vendor consolidation," he added. Lloyds, after taking over HBOS, has been looking to consolidate its vendor base as HBOS had a large number of small suppliers. In reply to an e-mail questionnaire, a Lloyds spokesperson said the bank has no current plans to consolidate IT offshore suppliers.

While IBM, EDS and Accenture, apart from several European suppliers, are established incumbents in many of these accounts, Indian offshore service providers are hoping to gain because of their specialised skills across different verticals.

"Traditionally known only for their IT outsourcing capabilities, Indian players' value proposition is now built around offering end-to-end services. As companies look to consolidate their IT-BPO vendors, Indian vendors are well-positioned to take advantage," said Vikram Gulati, director at outsourcing advisory firm Quantum Step.