GE reconsiders IT services vendors

By siliconindia   |   Wednesday, 20 September 2006, 07:00 Hrs
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Bangalore: General Electric (GE), the mainstay for several Indian IT services companies rationalized its vendors after a gap of three years. It added new Indian IT services vendors recently in its list while discontinuing some relationships.

The HCL Technologies is its new vendor to set up and operate development centers in India and China. On the other hand it discontinued its outsourcing engagement with vendors such as MindTree Consulting after parting ways due to differences in their business models.

The company has further renewed its relationships with vendors such as iGATE Global Solutions, Polaris Software and BirlaSoft for the next three years effective from January 1, 2007 till end-2009, said sources, known to the deals. The renewed conditions for these firms are more or less the same, having the existing rates and the vendors not experiencing any pricing pressure from the MNC major.

GE has several business units such as plastics, transportation, medical and financial services, among others, which outsource their IT requirements. It offshores nearly 80 per cent of its IT requirements, Indian vendors acquire a major chunk of it. And for many Indian vendors, GE is the top client in term of revenue.

TCS, Patni and Satyam Computers are some of GE’s Indian vendors with long-standing relationships. The company has signed up tier II vendors such as BirlaSoft, iGATE and Polaris in a phased manner over the years. GE is also the top client for TCS, bringing in about four per cent of revenues. It has a host of master services agreements with TCS, which it keeps renewing at regular intervals. For iGATE, GE brings in 26 per cent of the revenue, while for Patni it account for 15 per cent of revenues.

Analysts say that GE is viewed as a client demanding productivity gains from vendor on a year-on-year basis, but when one considers revenue stability and business volumes, it still remains an attractive customer.

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