The $17 billion Canadian networking major Nortel Networks said it was increasing its software outsourcing commitments from Indian companies, according to a senior official of the company.
The move to increase outsourcing will benefit Indian companies such as Tata Consultancy Services (TCS), Infosys Technologies, Wipro Technologies, Sasken and BPL with which Nortel has ongoing engagements.
Ashoka Valia, Nortel Networks India's new managing director, said, "Our partnerships with Indian software companies is growing. Engagements in wireless and other areas will grow and our long-term existing relationships will grow.".
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TCS, which is the biggest player in the Indian software industry confirmed the development. It's vice-president, corporate communications, Atul Takle said, "Nortel has confirmed its intent to increase its spending with TCS in the wireless area".
Infosys, with which Nortel has an outsourcing partnership, saw revenues from Nortel contribute 3 per cent to the top line of Rs 2,603 crore in 2001-02.
This was down from the 4.92 per cent that the relationship from Nortel contributed to the company's topline of Rs 1,960 crore in 2000-01.
Wipro Technologies had the highest exposure to Nortel prior to the slowdown in the worldwide information technology and telecom industry, and it stood at about 8 per cent in 2000-01 on a revenue base of Rs 1,179 crore.
In 2000-01 Wipro Technologies had a revenue traction of about $31 million from Nortel and this figure came down to $29 million in 2001-02 on revenues of Rs 2,270 crore.
Nortel which is the leading equipment vendor and the market leader in the contact centre market, Valia said was bullish on its India prospects and would be targeting the finance, banking, Government, and travel segments of the market this year. It has managed to clinch deals with Bharti and Gas Authority of India Ltd for its long distance networks this year.
The networking company had been hit hard by the slowdown in the US economy and this had in turn ensured that its outsourcing agreements with Indian companies either remained flat or were reduced. Last year the company had also closed down its development lab in Delhi, which was working on products that no longer had any market pull.
The announcement to increase its outsourcing engagements is good news for Indian software companies which have had the rug pulled from under their feet. Indian software companies like Infosys and Wipro have over sequential quarters only reported growth rates of 12 and 16 per cent, respectively, which represent the pressures of operating in an economy where spending is very tight.