TCS, Infosys bag $400-m ABN outsourcing deal

The contracts are the largest the two companies have ever won.

Tata Consultancy Services and Infosys Technologies have together won outsourcing contracts worth $400 million from Dutch bank ABN Amro.

The contracts, the largest the two companies have ever won, are part of a $2.2 billion outsourcing deal sealed by the bank today. IBM, also part of the deal, gets the lion's share of business "" $1.8 billion.

While TCS and Infosys will handle application support and enhancement for ABN Amro, IBM will look after the entire information technology infrastructure of the bank. ABN Amro has also roped in Accenture and Patni as its preferred vendors along with IBM, Infosys and TCS for various future software development work.

TCS gets a share of $260 million of the $400-million business coming to the Indian vendors and will be handling a part of ABN Amro's geographical spread in Europe and South America.

Infosys gets $140 million worth of business over the next five years and will be responsible for North America, part of Europe and new growth markets such as Hong Kong and Singapore.

TCS is expected to take over 200 ABN Amro personnel. But a TCS spokesperson said this was yet to be firmed up.

In a video-conference from Amsterdam, TCS Managing Director and Chief Executive Officer S Ramadorai told reporters, "Leveraging our global delivery model through centres in Latin America and Hungary, we will manage a major part of ABN Amro's application support and enhancement services for its operations in the Netherlands and Brazil, and for its private clients globally."

The news of the deal pushed up the share prices of the three companies. The TCS stock closed at Rs 1419.25, 0.95 per cent higher than yesterday's closing of Rs 1405.85. The Infosys stock closed at Rs 2426.75, 2.13 per cent up over yesterday's closing of Rs 2376.25. The share prices of Patni went up by 0.70 per cent to Rs 428.95 from yesterday's Rs 425.98.

TCS also announced today that it had won the right to deliver application development for the Dutch bank as one of the five preferred suppliers. It will deliver for ABN-Amro's strategic banking platform. TCS said the deal was valued at around $15 million. Analysts said they expected the TCS' share of business to touch $400 million eventually.

Infosys said it hoped that its $190 million share would go up to $250 million as transition happened over the next few quarters. Infosys is expecting to start transition by the end of September 2005.

The company said this deal to develop, support and enhance a wide spectrum of applications for ABN Amro was the single largest multi-year multi-million Euro contract it ever won.

Infosys' share of the overall contract includes committed volumes in North America, Europe and the Asia-Pacific region. The company said it was being chosen as one of the preferred five to bid for application development projects of the Dutch bank.

Following a competitive tender, ABN Amro has reached an agreement with the selected vendors to improve the performance of its IT services and realise significant efficiencies globally.

TCS will engage around 500 consultants for the job and increase the headcount as and when required, and will also acquire a certain number of ABN Amro employees.

"This is a landmark deal for Infosys," said Nandan M Nilekani, CEO, president and managing Director, Infosys.

"This deal clearly indicates that large offshore players like us have a competitive business model to deliver large, global, multi-year contracts. The deal also signifies a trend towards strategic global sourcing, where customers are selecting multiple, best-of-breed vendors to help improve efficiencies in their IT service delivery."

Our differentiation in the marketplace enables us to be a premium player even in such large multi-year contracts."