In the latest sign yet of the growing influence of Indian outsourcing companies, Dutch bank
is set to award a massive contract to
Tata Consultancy Services
Citing an unnamed source, Reuters said the two Indian companies won IT application and development contracts likely to be worth more than $250 million -- among the biggest deals ever for an Indian software company. TCS and Infosys could not be immediately reached for comment.
ABN Amro was expected to announce deals to outsource application development, application maintenance and IT infrastructure -- worth an estimated $2 billion combined -- next month. But TCS scheduled a press conference with its chief executive in Amsterdam on Thursday to announce what the company said was the largest-ever Indian IT deal, Reuters reported.
The source told
that TCS and Infosys will not only take on application maintenance for ABN but also will join three other vendors in handling application development. The other vendors are
Patni Computer Systems
FTN Midwest Research analyst Trip Chowdhry said the contracts show that Europe is becoming very aggressive in outsourcing, and Indian companies are now winning mega-deals, putting them on the same footing as such giant IT services as Accenture and
Chowdhry has a buy rating on Infosys and his firm does not cover TCS; his firm has not done banking with Infosys.
However, because the ABN Amro deal spans several years, it will generate revenue only in the tens of millions of dollars for each company annually, which means no major impact on expectations, said Gilford Securities analyst Ashish Thadhani. "We obviously view this is as a positive, but will not necessarily change any estimates based on deals like this because some is baked into expectations going forward," Thadhani said.
Thadhani has a buy rating on Infosys and his firm has not done any banking with the company.
Indeed, many analysts had anticipated the ABN Amro contracts, although their size has remained a question. Chowdhry, for instance, had pegged the deal to be worth $100 million for Infosys. UBS analyst Trideep Bhattacharya had estimated the contract could be split into two components, with Infosys winning a portion of the application management worth 150 million to 200 million euros. He also said in a note earlier this month that Infosys might have to add 400 to 700 ABN Amro employees to its payroll.
Bhattacharya has a buy rating on Infosys and his firm has done investment banking with the company.