Leading IT Firms Pay Huge To Win Big Contracts

This trend is not something new. ABN Amro had signed a contract of over $1 billion with Infosys and TCS in 200 that includes transfer of people and assets, and some blunt payment. Later in 2012 IBM won a billion-dollar contract from Mexico's biggest cement firm Cemex leaving Infosys and Wipro behind.

HCL Technologies had gained a $500 million contract from PepsiCo for infrastructure management services in May. To be in a safer side the homegrown IT majors structure the deals to stay competitive as the leading IT firms now bid against global outsourcing firms.

Suresh Senapaty, Chief Financial Officer at Wipro, said "It is not a standard kind of payment term. Buying the captive IT centre brings its own benefits." 

"Depending upon how the customer is looking at, it varies. I won't say across the board but there are quite a few deals where you are able to protect your downside and able to structure the deal to take it forward by putting something upfront," he added.

Tom Reuner, an analyst at Ovum, a London based IT research firm said "Given the maturity of the outsourcing market, most providers apply a portfolio management approach to sourcing large deals based on their penetration of specific verticals,"

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