HCL losses to CSC for ArcelorMittal $600 Million deal

By siliconindia   |   Friday, 14 January 2011, 01:52 IST
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Bangalore: Computer Sciences Corporation (CSC) outbid HCL technologies to win the outsourcing contract of Luxembourg-based steelmaker ArcelorMittal. The contract is worth $600 million for five years. The contract demands CSC to consolidate ArcelorMittal's IT infrastructure across Europe. It will also have to maintain the data centres of the company. The other players who bid for the contract were HP, IBM and Capgemini and Wipro Technologies. The closest contender for CSC was HCL. "HCL is one of the few IT companies that are open to taking on employees from other companies on its rolls since it has experience. But the problem lies in the fact that it will be more expensive for HCL than for a company like CSC to implement," says Avinash Vashistha , CEO of advisory firm Tholons. "In Europe, where labour laws are strict, the pricing is quite different. And because of CSC's larger overseas presence, it can also deploy these employees for other projects which HCL will not be able to do, therefore making the whole process much more expensive for HCL," adds Vashistha. Another strong reason for CSC to win the bid was its package solutions to develop new applications. It does not have to build anything specifically for ArcelorMittal as it has solutions which are applicable to the European domain and its region. Also CSC has large presence in India with over 25,000 employees. IT is aid that some of the work will be offshored to India. "This is likely to result in savings of nearly 20-30 percent for the steel giant" a person familiar with the transaction said. But Labor laws in Europe support anti-outsourcing and outsourcing is considered a taboo. However the labor unions are against outsourcing. Europe accounts only 20-25 percent of India's total IT export revenues. A recent deal from the European market has been the 10-year contract from the UK government for administration of the state pension scheme which is awarded to TCS.