For the first quarter of 2010, there were some notable outsourcing contracts established, albeit they’re not the ‘mega deals’ of old, but substantial they are still.
It was data and advisory firm TPI, who projected on the 18th of March that the global outsourcing contract volume is set to increase this 2010. The Economic Times even projects that $1 billion worth of outsourcing contracts are headed for India this year. These contracts, as Everest Group’s Gaurav Gupta stated, are typically in the range of $50-100 million. He further adds that Indian IT services vendors currently have some mega outsourcing contracts in the pipeline.
One such contract is Punjab & Sind bank’s contract with Indian IT Company Wipro (NYSE:WIT) on the 24th of February, wherein the two companies signed a 10-year comprehensive IT outsourcing contract. A deal that had previously been awarded to Satyam (NYSE:SAY). The contract featured prominently in the news due to the failure of the previous contract with Satyam.
But what we estimate as one of, if not the largest contract for the quarter is the $200 million IT outsourcing contract of Accenture (NYSE:ACN) with Starwood Hotels and Resorts for the development, maintenance and running of the applications of the hotel. The deal was signed on the 15th of March. The deal sits high on the list of substantial deals for this quarter as Starwood Hotels (NYSE:HOT) is one of the biggest hotel and leisure companies in the world, including, Westin, Le Meridian and Sheraton.
There are other equally notable deals that have gone through this quarter, including contract extensions such as CSC’s (NYSE:CSC) contract extension with United Technologies Corporation(NYSE:UTX) , projected to add over $1.5 billion in value to the existing contract in a five-year period that was announced on the 18th of March; and Lockheed Martin’s (NYSE:LMT) contract extension with NASA, which has an estimated value of approximately $230 million.
The contracts are just beginning to pour in. This March, the amount of contracts being won has been steadily increasing with the economy’s recovery. It is expected that the pace and value of the contracts will increase further by year’s end and perhaps we will see the ‘mega deals’ return once again.
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