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  • Outsourcing Companies Have a Big IT Week 0 comments
    Jun 21, 2010 12:22 AM | about stocks: IBM, TEL

    By: Audrey B.

    Contrary to the slowdown projected for IT outsourcing growth, in just a span of a few days, three big outsourcing companies won IT outsourcing contracts all from different regions in the world.

    On the 14th of June, Indian company HCL Technologies (NSE:HCLTECH) signed a five year, $79 million IT infrastructure outsourcing agreement with Singapore Exchange. The said contract is part of a $179 million project to speed up the bourse’s trading systems. The project is expected to establish the fastest trading system in the world (90 microseconds per transaction) for Singapore Exchange, as part of its Reach Initiative. According to Mr. Bob Caisley, EVP and CIO at the Singapore Exchange, the Reach Initiative is expected to “provide customers with the fastest access to Asia.” Revenue from the deal is expected to start coming in during the last quarter of the year, while steady state revenues will flow in by first quarter 2011.

    The second company to land an IT deal this week is fellow India company Tata Consultancy Services Ltd. (NSE:TCS) On the 16th of June, TCS won a multi-year outsourcing contract with Nordic mobile communications provider, Telenor Norway (OSL:TEL). The contract will involve IT application maintenance and development services for Telenor Norway, currently the 6th largest mobile phone operator in the world. TCS, meanwhile, had been ranked as the leading outsourcing provider in the Nordic Region by global sourcing advisory firm, Equaterra just last month. Financial terms of the deal were not disclosed, but will likely pose both beneficial financial and strategic opportunities for TCS.

    The third and last company to sign an IT outsourcing deal last week is none other than technology giant, IBM (NYSE:IBM), who signed a five year Integrated Management Services (NYSE:IMS) agreement with another Telecom firm, Quippo-Wireless Tata Tele Info Services (Quippo-WTTIL) on the 17th of June. IBM will be providing technical support and hardware, mailing and infrastructure management software applications for Quippo-WTTIL. The financial terms of the deal were also not disclosed. This is however, the fifth such deal that the Big Blue has signed, along with Bharti Airtel (NSE:BHARTIARTL), Vodafone Essar, Idea Cellular (NSE:IDEA) and Bharat Sanchar Nigam Ltd or BSNL.

    A lot more deals are expected to come through especially during the last two quarters of the year, not just for IT but also outsourcing in general. IT outsourcing growth, however, is projected to slow down, with renegotiations, not new contracts, that are expected to comprise a big bulk of contract signings for 2010—approximately $12 million in annual contract value. And while the trajectory for IT outsourcing may change yet, with only half the year gone by, last week’s performance did not likely cause a ricochet.

    Disclosure: No Position
    Stocks: IBM, TEL
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