The Hindu Business Line : TCS, Infosys clinch deals worth $400 m from ABN Amro

IN one of the biggest global IT outsourcing deals in recent times, Indian vendors Tata Consultancy Services (TCS) and Infosys Technologies have clinched a total of just over euro 300 million ($400 million) worth of business from Dutch financial powerhouse ABN Amro.

The five-year deal involves outsourcing of IT infrastructure, application support and application development. The total size of the deal involving the first two components is about euro 1.8 billion ($2.2 billion).

The committed business for TCS was about euro 200 million ($260 million), while for Infosys it was at euro 107 million ($140 million).

TCS and Infosys will be handling application support and enhancement as part of the deal.

The IT infrastructure part of the deal involving servers, desktops and storage systems valued at euro 1.5 billion has been outsourced to IBM.

ABN Amro has also signed up Accenture and Patni Computers along with IBM, TCS and Infosys as preferred suppliers for the application development component. However, ABN Amro did not stipulate as to how much it will be spend on the application development projects.

Following the announcement of the mega win, TCS shares closed higher on Thursday by one per cent at Rs 1,419.25, whereas Infosys shares ended higher by 2.13 per cent at Rs 2,426.75 over the previous close. TCS and Infosys said separately that the ABN Amro deal was the single largest multi-million euro contract ever won by them.

TCS will be offering services for ABN's operations in theNetherlands, Brazil as well as for ABN's Private Client Business globally, while Infosys will be servicing the bank's operations in North America, Europe and Asia Pacific.

TCS said that in addition to work to be done at its centres in India, over 500 employees would work from TCS global delivery centres in Brazil and Hungary.

In addition to the euro 200-million deal, TCS has also bagged a $15-million contract under the bank's discretionary expenditure for developing a strategic banking platform.

ABN Amro said in a press release that through this initiative the bank expects to streamline its global IT organisation that would lead to an improved performance of all IT services and to significant efficiencies.

The bank expects to have a new technology division of approximately 1,800 full-time equivalents or FTEs (read employees) as compared to the 5,000 at present.

About 2,000 IT FTEs will be transferred to the selected IT vendors of which some 1,800 will go to IBM and about 200 to TCS. ABN Amro expects to generate savings of euro 258 million a year as of 2007 and euro 600 million later on, from the initiative.

"It is the biggest IT services deal won by an Indian company ever," said Mr S. Ramadorai, TCS CEO and Managing Director. "In addition to the annual revenues the deal generates, this is the first multinational global engagement that allows TCS to utilise its global delivery modal in its entirety," he said.

"This is a landmark deal for Infosys," said Mr Nandan M. Nilekani, CEO, President and Managing Director, Infosys. Mr T.V.Mohandas Pai, Chief Financial Officer, Infosys, said the company sees a potential to scale up the business from $140 million to around $240-250 million going forward.

TCS Chief Financial Officer, Mr S. Mahalingam, said the company expects to deploy over 1,000 of its employees both in India and overseas to service ABN Amro.

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