TCS bags $500 mn Citigroup contract

The deal is a maintenance and development contract, based on 'take-or-pay-order' system.

Tata Consultancy Services (TCS) has bagged $500 million (Rs 2,200 crore) outsourcing deal from global financial services giant Citigroup Inc. It is an application, maintenance and development contract, based on a 'take-or-pay-order' system.

TCS officials confirmed the deal and its size but declined to spell out the client's name. "It's not our policy to divulge the client-specific information," they added.

Industry sources said the order came from Citigroup's consumer division and TCS was expected to start the work in the first quarter of this financial year.

In the first year, TCS would employ 2,200 people for the assignment and would ramp up it in the successive years, depending on the contract, the sources added.

The tenure of the deal was not immediately known, nor the exact date of signing it. The sources said it was signed either in late March or in early April.

The contract was based on a 'take-or-pay-order' system, under which TCS will be paid a fixed sum of money for completing the work within a stipulated time.

TCS will execute the deal from its global delivery centres across the world, including from the one set up recently in London. TCS would also provide manpower, quality and processes to Citigroup.

This is in contrast to the present method of 'time and material contract', where Indian vendors charge fees by the hour.

IT majors such as i-flex and Satyam Computer Services are also part of the negotiations. However, this could not be confirmed.