Leading IT Firms Pay Huge To Win Big Contracts

BANGALORE: Today, it has become a trend in the industry where all the software exporters are using their power for getting the information technology contracts, for instance they are either paying money upfront or buying assets, reports Varun Sood of The Economic Times.

Some industry executives and experts believe that this trend will gain grip in a year that has 3.3 lakh crore of contracts up for renewal. Country’s largest IT firms, like TCS and Wipro are also not untouched from this trend.

TK Kurien, Chief Executive Officer, Wipro, said "Any deal you do, there will be a certain level of structuring that goes in," after TCS paid about $200 million to buy the IT subsidiary of Canadian utility Atco as part of its single-largest outsourcing deal worth $1.2-billion, reports ET.

TCS merged its Japanese subsidiary with IT Frontier Corp (ITF), a unit of Mitsubishi by signing an agreement with Mitsubishi in April this year. In the deal TCS holds 51 percent in the new entity.

Sid Pai, who heads the Indian arm of outsourcing advisory TPI said, "It's very much a trend. As deal economics move inexorably toward usage based models to include the adoption of cloud technology, service providers will have to absorb an ever increasing portfolio of client hardware and software and human resource assets."

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