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March 27, 2006

IT Outsourcing: Big rewards from the big renewals?

Business Today has a cover story focusing on the $100 billion worth of IT outsourcing contracts that are coming up for renewal in the next two years. The article examines the chances for Indian firms to "break the stranglehold of the IBMs
and the Accentures, and grab a piece of this (action)".
» Customers are increasingly breaking up contracts, looking for multiple vendors and specialist, best-of-breed vendors around the world

» Indian IT services firms are considered the best in the application maintenance and development space

» The value proposition of Indian vendors-the global delivery model-has matured today, and there is enough confidence on the client side in Indian vendors, as well as on the vendor side on the implementation front

» With Indian companies integrating into the consulting space, they are able to provide a total solution-for instance package implementation, infrastructure hosting, applications development all together-to clients

» The capability to offer an integrated solution is also resulting in Indian companies aiming for larger-value deals, in the $500 million-$1 billion (Rs 2,250-4,500 crore) vicinity

» In many large, single-vendor outsourcing deals, customer expectations from outsourcing haven't been met, which is reflected in the termination of a few contracts

Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.