TCS, Infosys, Wipro Battle For Citigroup Outsourcing Deal

In October, industry leader Tata Consultancy Services (TCS) and its smaller rivals Infosys and Wipro took turns to woo Don Callahan (the head of operations and technology at Citigroup Inc.) while he was in India.

The stakes are high as IT companies are being forced to look for newer avenues of growth in a harsh environment. More importantly, an outsourcing contract worth billion dollars is getting rarer by the day because of the broader belt-tightening by their clients across the globe.

Mumbai-based TCS, led by N. Chandrasekaran (CEO), showcased its novel blockchain-related products to Callahan.

Callahan’s visit to the headquarters of the nation’s top three IT services exporters is significant as it marks the beginning of a 12 to 18 month process during which Citigroup shall decide the work it wants to outsource, the number of vendors it wants to have, and the size of the contract and its duration.

It is expected to invite bids from the foreign and Indian technology vendors after calling for so-called request for proposals (RFPs) in March next year, before awarding the contract by March 2018.

TCS won the 2.5 billion dollars outsourcing work in October 2008 for managing Citigroup’s back office operations for 9 years, 6 months. TCS also paid 505 dollars million to Citigroup to buy its India based captive business processing outsourcing arm, Citigroup Global Services. Additionally, Citigroup gives over 200 million dollars in business annually to TCS, 100 million dollars to Infosys and at least 50 million dollars to Wipro. Meanwhile, TCS share price was trading 0.43 per cent higher on the NSE today.

Getting a billion-dollar outsourcing contract is a giant task for IT firms these days as clients are looking to minimize costs. A multi-year, large outsourcing contract assures a stable revenue stream.

For more details, please visit TCS share price history.