Indian IT firms to face renegotiation deals from UK

By siliconindia   |   Wednesday, 23 June 2010, 14:44 IST   |    5 Comments
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Indian IT firms to face renegotiation deals from UK
Bangalore: As the UK's coalition government announced tough measures to achieve significant savings over the next five years, major outsourcing vendors in India, which have UK's government departments as customers, are set to face renegotiation of existing contracts. George Osborne, Britain's treasury chief told the House of Commons that many government departments will face budget cuts up to 25 percent to help raise nearly $44 billion in expenditure savings. Earlier this year, India's major outsourcing vendor TCS had won around $800-million contract to manage UK's state pensions scheme from the Personal Accounts Delivery Authority (PADA). The Conservative party had voted against the auto enrolment legislation, which was a part of the contract signed close to the elections. "There will be more work at lower rates " we are already discussing renegotiation," said a senior executive at one of the outsourcing vendors currently serving UK's government. When contacted by The Economic Times, TCS spokesman declined to comment on the company's PADA contract. In a review of UK's public sector IT spending, the country's treasury department had last year identified the potential of around $10.6 billion in annual savings. UK's pensions minister Steve Webb had indicated earlier this month that his government will review the pensions contract. "We will review the way in which auto-enrollment is implemented, which includes looking at the National Employment Savings Trust," he had said. Even as the government tightens its purse strings and approaches vendors for lower rates, the savings target being aimed will mean more outsourcing of non-core processes.