INDIA BUSINESS WORLD - OCTOBER 21^st - NOVEMBER 15^th - 2007

TCS BAGS $1.2 BN MSO CONTRACT FROM NIELSEN

In the biggest ever outsourcing deal won by an Indian firm, software leader Tata Consultancy Services (TCS) said it has secured a $1.2 bn global contract spread over 10 years from Dutch media and market information provider The Nielsen Company. The order covers a range of services from software to back-office functions to knowledge process outsourcing (KPO) and the revenue flow will start immediately, top TCS officials said. The agreement will also bring 350 employees of Nielsen's under the TCS fold with expertise in information management in the area of KPO. In addition, the scope of the partnership includes setting up an innovation centre for next generation businesses in information and media. The centre will, however, cater to customers other than Neilsen as well. "The contract is definitely very positive. But it also has to be viewed in the context of being a 10-year deal. As percentage of revenues it will be only around 2% annually," said an analyst. The only other billion dollar contract to have come to an Indian IT provider is British Telecom's contract to Tech Mahindra in December last. However, Tech Mahindra had to make an upfront payment of $110 million to BT and take a hit on its bottomline as a result. Not counting this deal, the second largest contract in Indian IT was TCS' deal with the UK-based Pearl Group. This contract was for $850 mn involved the transfer of 950 Pearl Group employees to TCS.