| Good show
Mumbai, Feb. 2: Wipro today grabbed an over $300 million slice of a $15-billion contract that General Motors, the world’s largest carmaker, farmed out to six of the world’s largest IT companies.
The contract is spread over five years.
The $15-billion contract awarded to EDS, HP, CapGemini, IBM, Compuware Covisint and Wipro comprise essential elements of GM's future information technology programme.
Suresh Senapaty, Wipro’s chief financial officer, said the contract would kick in from June. Wipro does work for GM under an existing contract that spins out in June. The new contract will cover some of the existing jobs as well.
“Our end of the contract is in the middleware segment,” said Sudip Banerjee, president (enterprise solutions) at Wipro.
Senapaty said the contract was significant since GM had clubbed all its IT outsourcing jobs into one pile and had invited bids. GM intends to create an integrated IT platform that seamlessly knits all its businesses across the world against the earlier practice of breaking them up into regional hubs.
Wipro will provide application development, maintenance, data integration, data migration work to the world’s largest automaker.
“GM has contributed close to $30 million in the last four quarters, so they are one of our big clients,’’ said Banerjee. At $300 million, it will be $60 million a year now.
The contract does not include any kind of BPO work.
As a result of continuously scaling up capacity in the last few years, the company said it does not expect any bottleneck when it comes to the implementation of the contract work. “We expect the five-year contract to work out smoothly without any bottleneck,” added Banerjee.
Today’s development is part of a broader trend under which large companies break up a contract into smaller-sized deals that are given out to multiple vendors.
“Indian IT companies score high on offshoring. As a result, smaller deals are offshored to Indian companies. This trend started sometime back during the ABN Amro deal,” said Apurva Shah, associate vice-president of Prabhudas Lilladher.
Analysts see more such deals coming to the Indian IT companies. “I, however, do not believe that apart from Wipro, TCS, and Infosys, any other Indian IT company has the capacity to get and implement such multi-billion-dollar contracts,” Shah added.
These awards mark the end of the first phase of this re-sourcing initiative and the beginning of the second phase ' transitioning the work between suppliers and implementing innovative technologies that will support the company's global enterprise by providing speed and flexibility to the business.
Based on the current spend rate, GM would spend approximately $15 billion over the next five years. As a result of savings generated through the bid process, the spend rate will be less, Wipro said.
“Approximately 50 per cent of the spend is being awarded to systems integrators today. GM's telecom contracts will expire at the end of 2006. Therefore, these contract awards will be made later in the year,” the company said.