Tuesday, July 28, 2009

Filled Under: , , ,

TCS, Infosys Patni await clarity on ABN Amro outsourcing

Top outsourcing firms including TCS, Infosys and Patni Computer wait for more clarity at RBS-owned ABN Amro, as the management remains undecided about outsourcing deals worth $400-500 million signed by the erstwhile Dutch bank four years ago with these vendors.

In April 2005, ABN Amro had announced several contracts worth nearly $2.5 billion, due to be renewed in 2010. While IBM had won the lion’s share of the deal (around $2 billion) for managing the bank’s servers, desktops and other IT infrastructure, Accenture, TCS, Infosys and Patni shared $400-500 million worth of contracts for software application, development and maintenance.

At least three people familiar with the sourcing decisions at ABN Amro told ET that while RBS is yet to take a call on whether it wants to integrate its technology and business systems with ABN Amro, there is a definite move to shrink the Dutch bank’s operations through a sale, which will bring down the outsourcing revenues for these vendors as well.

“It’s not business as usual. We are told it could take another few months before any clarity emerges. The 2010 renewal is not the only issue. The business seems to be getting smaller,” said a senior executive at one of the top tech firms serving ABN Amro. He requested anonymity because he is not authorised to speak about customer engagements.

Experts like Bob McDowall of Tower Group say RBS, which is now a nationalised bank in the UK, is under pressure to sell assets outside of UK. “IT integration (with ABN Amro) has effectively ceased. RBS certainly will not be planning IT integration initiatives that will make a sale or disposal of the ABN Amro businesses more difficult,” he said. “I would suggest that the longer-term prospects for the contract will depend on when and who acquires the relevant businesses in ABN Amro supported by the outsourcing contracts,” he added.

Officials at Infosys and TCS declined to offer customer-specific comments.

RBS, which has an annual IT budget of $3-4 billion, too is in the process of reviewing its businesses. Some experts say RBS will actually be looking at outsourcing in a big way to achieve these efficiencies after the strategic review is over.

“Cost has become more important for RBS now in the wake of the economic slowdown and there is a greater focus on outsourcing,” said Vikram Gulati, director at outsourcing advisory firm Quantum Step. An RBS spokeswoman confirmed that her bank continues to look at outsourcing to India.

“India is already a major centre for the group and is our third-largest employment centre. As a result of our acquisition of ABN Amro, we now employ 8,000 people in India serving our operations globally. Last year we have been progressing with work to integrate the two businesses and develop all our centres in the UK, India and across the globe,” the RBS spokeswoman said.

0 comments:

Post a Comment

Blog Archive