GODREJ, HEWLETT PACKARD INK 10-YR OUTSOURCING CONTRACT

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IN a major domestic outsourcing deal, Godrej Industries and Godrej Consumer Products have signed a 10-year outsourcing contract with Hewlett Packard (HP). The value of the contract was not disclosed, but would include application development and maintenance, infrastructure management and transformational initiatives. As part of the agreement between the firms, HP will also take over the staff working in the IT operations of the two companies.

Since the first such outsourcing deal between Bharti and IBM, a number of similar deals have been announced by Indian business groups. In February this year, the Future group had signed a similar outsourcing deal for $150 million with Wipro, in which about 265 employees of Pantaloon Retail had moved to the IT firm. In this case, the IT management staff will be retained by Godrej, while the IT operations staff will move to Hewlett Packard.

These contracts help domestic firms to cut IT costs and bring in greater efficiencies. For multinationals, this represents a new and growing business opportunity when most of them are facing growth pressures in their home markets. The Godrej group had appointed Ernst & Young to help them identify the most suitable IT partner.

The Godrej win is significant for HP because it is in segment outside of financial services, which has traditionally been its strongest segment. Sometime back, it had also won a transformation engagement from Britannia.

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