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$1billion IT Contracts For Indian IT Companies From ExxonMobil


World’s biggest oil company ExxonMobil is in talks with India’s top technology firms and multinational Tendors for outsourcing of IT.

A day after British Petroleum (BP) formally awarded over $1.5-billion outsourcing contracts to TCS, Infosys and Wipro along with IBM and Accenture, top Indian offshore vendors including L&T Infotech and HCL Technologies - along with other MNC vendors - have locked horns with each other for almost $1-billion outsourcing deal being fleshed out by ExxonMobil.
Large oil, gas and utility firms such as Royal Dutch Shell, Chevron, ExxonMobil and BP run their business processes powered by complex ERP software from SAP and Oracle. At a time when their operational and functional heads are demanding lower operational costs, outsourcing and offshoring of ERP maintenance and support is gaining momentum. Research firm Gartner says the economic turbulence is a major catalyst for outsourcing of ERP systems and services.
For instance, BP expects to save $500 million over five years by reducing the number of its suppliers to five from around 40 and sending more projects to be delivered from cheaper offshore locations such as India.
Most of these new contracts are being negotiated for at least 10-15% lower billing rates, with almost 90% of the contract to be delivered offshore. “BP has extracted pricing cuts in the range of 7.5-15% from most vendors,” said CLSA analysts Bhavtosh Vajpayee and Nimish Joshi in their Wednesday research note about the BP contract. “Offshore share of delivery is expected to go up materially from 70% to up to 90%,” they added.
Experts believe that customers are increasingly giving away their application development and maintenance projects to Indian and offshore firms while letting IBM to remain the master integrator. “When Telstra and BP recently consolidated their supplier base, IBM was chosen the master supplier with Infosys, EDS, TCS, Wipro and Accenture working on niche application projects,” said an outsourcing expert based in Australia.

Source : ET



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