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Thursday, September 01, 2005

Offshoring – Watershed Deal – The Largest IT Deal

There is a huge jubiliation in the India HQ companies community about the ABM AMRO deal ammounced today.After a careful analysis of the options, ABN AMRO says it has chosen an IT service solution that encompasses in-house consolidation, partial outsourcing, multi-vendor strategies and offshoring.Further streamlining of the bank's global IT organisation will lead to an improved performance of all IT services and to significant efficiencies. ABM AMRO has signed global services agreements with five IT-vendors for five years, for a total value of approximately EUR 1.8 billion.
The selected vendors are:
- IT Infrastructure: IBM
- Application Support and Enhancements: Infosys, TCS
- Application Development: five preferred suppliers Accenture, IBM, Infosys, Patni, TCS

This is awatershed deal in many ways - this represents the largest sum committed by a Western firm to Indian IT-services vendors. ABN Amro is said to want to move more than 2,000 IT jobs to India to take advantage of the country's low cost environment.This is also the largest deal won by an Indian IT services company ever.TCS says it plans to leverage its global delivery model through centres in Latin America and Hungary and it will manage a major part of ABN AMRO's Application Support and Enhancement services for its operations in the Netherlands, Brazil as well as its Private Client Business globally. This is the first multi-national global engagement that allows TCS to utilise its Global Delivery Model (GDM) in its entirety. In addition to its large development centre in India, over 500 consultants will work from TCS' Global delivery centres in Brazil and Hungary. Well, the rules of the outsourcing game has significantly changed - bloated western firms which thought that India HQ firms can never win major deals and publicly deriding them while intensly fearing them within should undersstand reality - setting up huge development workforce alone would not make them more than equal - its the ethis,the spirit to win and move ahead thats making the difference.Deals like this would be spoken of when the history of outsourcing gets written in future. No room for complacency here for Indian HQ companies - managing mega engagements are not the same as managing medium size deals - but the companies that have won the deal have time and again proven their mettle in conquering new forntiers.Moving forward, the the basis of competition for IT providers, Indian or multinational companies, will no longer be cost-competitive, within-budget deployment of technology. It will soon change to the improvements in clients businesses that can be enabled by these service providers. IT firms have to now turn themselves into partners, helping their customers shape their business future, not merely their technology future. This means IT firms have to now acquire the capability to design potential business scenarios that incorporate and examine various technology alternatives, simulate them, and test them for attractiveness. Future competitive advantage will, in large measure, be defined by mastery over Business Solutions. Exciting times lay ahead for the well prepared and the difference between winners and also ran shall keep widening.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"